Knowing how much and which kind of inventory your brand needs involves a complex web of data that companies often keep up with via spreadsheets or legacy systems that don’t provide a full picture of the business.
Syrup Tech, now armed with $6.3 million in new funding, is feeding all that data, like transactions, marketing and inventory, and combining it with other data, like social media trends and even the weather, to spit out predictive inventory recommendations using artificial intelligence and machine learning. This way, merchandisers and planners have better information on what they need and can reduce some of the waste.
“I was at McKinsey previously, and was shocked to see merchandisers spend hours on spreadsheets,” James Theuerkauf, co-founder and CEO of Syrup Tech, told TechCrunch. “My thought was to let the AI do the number-crunching and let the merchandiser make the creative decisions using the AI as support.”
Theuerkauf explained that inventory prediction has become harder, especially as brands battle stockouts, which causes them to overcompensate by ordering more. This can lead to excess inventory and the need to do markdowns, which we recently saw both Walmart and Target have to do to clear out their inventories. All that excess often ends up in landfills.
The supply chain woes are also throwing a wrench in the inventory management gears, and Syrup Tech is working to provide recommendations sooner rather than later, so if the wait is 40 days, merchandisers should get in their orders now, or if the wait is 10 days, they can postpone those decisions.
He says Syrup Tech’s customers (it is currently working with eight) are seeing double-digit increases in profit margins through reductions in stockouts, reductions in excess inventory and waste and time saved by eliminating the manual workflows.
“The global supply chain is a bit of a ‘blessing,’ because now this is a spotlight shining on inventory, a lot of interest in figuring this out and a shift away from other legacy systems to modern systems,” Theuerkauf added.
Indeed, the fully remote company began working on its artificial intelligence–powered predictive SaaS tool in 2020 and is operating in a sector that recently saw other inventory-focused companies attract venture capital, including Zippedi and Inventa.
What makes Syrup Tech different, according to Theuerkauf, is that it is taking the approach of combining strong prediction action through AI that fits into the workflow of merchandisers. He believes no one had figured that out before his company.
Meanwhile, revenue is up 14 times over the past 12 months and 2.5 times since the beginning of 2022, Theuerkauf said. As mentioned, the company is working with eight customers right now, mainly in the fashion footwear area, and has a waitlist of another five.
The company closed on its funding round in June, which gives it $7.3 million in total funding. Gradient Ventures led the newest round, which included Flybridge Capital, Firstminute Capital, Rackhouse Ventures and a group of angel investments from former executives at Adidas, Bonobos, Salesforce, ASOS, ThredUp, Zalando and Stripe. 1984 Ventures, which led Syrup Tech’s pre-seed round last year, invested as well.
Theuerkauf plans on using the majority of the funds to add to the company’s 14-person employee base. He is also looking at product development and to add more use cases. The company was looking mostly at in-season merchandise, but now is going to move upstream on the pipeline to focus on sourcing and production recommendations.
The new funding also puts the company in “a solid position for the next few years,” he added.