May 20–SPS Commerce, a St. Paul company that helps retailers and distributors do business with small suppliers via the Web, said Monday that venture capitalists were giving it $18 million to expandand acquire competitors.<\/p>\n
The financing from eight venture capital firms is a vote of confidence for privately held SPS at a time when many tech companies find it difficult to raise money. The industry’s prolonged downturn has forced SPS to slash its work force from 185 in 2001 to 81 today.<\/p>\n
The company has raised $28 million in venture capital in that time, including the latest funding. It is cash flow positive and expects revenue of $12 million to $15 million this year, CEO Archie Black said Monday.<\/p>\n
The latest $18 million in venture capital will be used to buy “three or four” competitors, Black said. He declined to name targets, though he said none are local firms.<\/p>\n
“This is a company that managed the ups and downs of the Internet and is a survivor, and now they are thriving,” said Michael Gorman, general partner at St. Paul Venture Capital, one of the investment firms involved in the latest funding round.<\/p>\n
The company, which has large customers like Sears and Costco, saw revenue grow 30 percent last year, he said.<\/p>\n
SPS Commerce acts as an Internet hub that allows small- and mid-sized vendors without electronic data interchange technology to ship orders directly to a retailer’s data network.<\/p>\n
This electronic ordering often is the “Achilles heel” of business-to-business commerce, said Adrian Gonzalez, director of logistics for the executive council of ARC Advisory Group, a supply chain technology research group in Dedham, MA.<\/p>\n
At least half of the country’s small- and mid-sized vendors still rely on faxes, phone calls and paper orders to interact with retailers and industrial distributors. Using a Web service allows these vendors to fill orders without buying lots of new technology, Gonzalez said.<\/p>\n
“SPS is the first company we’ve found that is able to establish how to efficiently roll out e-commerce networks between big companies and their suppliers,” said Murray Wilson, a principal at River Cities Capital Funds of Cincinnati. The firm is responsible for $3 million of the $18 million SPS just raised.<\/p>\n
—–<\/p>\n
To see more of the Saint Paul Pioneer Press, or to subscribe to the newspaper, go to http:\/\/www.twincities.com\/mld\/pioneerpress.<\/p>\n
(c) 2003, Saint Paul Pioneer Press, Minn. Distributed by Knight Ridder\/Tribune Business News.<\/p>\n
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