Deal Radar 2009: Aravo

According to AMR, the overall supply management market grew 11% in 2007 with continued double-digit growth expected. They project a $4.3 billion market by 2012, and the market currently stands at about $3.3 billion. Today’s Deal Radar covers the origins and growth of a SaaS player in the market, Aravo .

CEO Tim Albinson founded Aravo in 2000. While working with Goldman Sachs, Albinson began planning a business-to-business exchange. The day before he planned to resign from Goldman Sachs, competitor Big Vine, an online B2B barter marketplace led by the former CFO of Citigroup, publicly launched with backing from Kleiner Perkins. However, Albinson continued with his plans, resigned and went back to Goldman two days later to pitch to two senior members of the firm on investing in his marketplace, which he called ExchangeWave.

Six weeks after Albinson launched, the dot-com bubble burst and companies froze IT spending, cut their budgets and relied on more traditional practices. Albinson then realized that managing large amounts of complex supplier data was a bigger challenge than running the marketplace itself. ExchangeWave became Aravo, and the team focused on building a software-as-a-service supplier information management platform.

The San Francisco-based company claims to have a SaaS solution that can do for vendor management what Salesforce did for customer relationship management. Aravo’s products are offered on its SIM (Supplier Information Management) platform. One of their products, Aravo Supply, automates the management of supplier information; enabling suppliers, through a self-service feature, to enter their own information; and keeps all complex data systems updated and synchronized. Another solution, Sustain, handles ethical procurement, fair trade, sustainable business and green supplier compliance.

In May 2009, Aravo announced the release of Aravo Risk, a 360° solution for supplier risk management. The application allows users to measure customized risk metrics for each of their suppliers, monitor risk indicators via automated alerts and an executive dashboard, and mitigate supplier failure by triggering automated workflows. The company feels that the recent economic downturn has brought greater awareness to the problem of managing supplier information and supplier risk and that its latest offering could help customers keep the risk of doing business with suppliers as low as possible.

The company decides prices based on the number of suppliers and pricing is on a yearly subscription basis.

The company targets Fortune 1000 companies who have complex supply chains with at least 5,000 suppliers. Aravo has more than 30 customers and over 1 million supplier users. Its customers include Accenture, IBM, Boston University and General Electric, among others. Ariba, Dun & Bradstreet and Supplier Force are among Aravo’s competitors.

Aravo raised over $23 million in Series A, B, C rounds from individual investors and raised an additional $7 million Series D led by Charles Schwab and Big Sky Partners in December 2008. The company has doubled its year-over-year growth in the past two years and claims to be on track to be profitable in 2010.

Suggested Reading:
*Deal Radar 2008: ShiftWise
*Healthcare Supply Chain Management: Medassets CEO John Bardis
*Deal Radar 2009: Shipwire

This segment is a part in the series : Deal Radar 2009