katanaan enterprise resource planning (ERP) platform for small and medium-sized manufacturers, has raised €35 million ($34 million) in a Series B funding round.
ERP is a form of business management software that can perform a variety of functions within a company, from marketing and risk management to supply chain management and beyond. Integrations are critical to any ERP software as it typically involves taking data from various systems such as HR, CRM, accounting and order management to generate insights and analytics – at its core, ERP is all about identifying potential issues and improving of efficiency.
Founded in Tallinn, Estonia, in 2017, Katana is an ERP for the manufacturing sector, with pre-built integrations for many of the most common tools a manufacturer might use, including e-commerce platforms (e.g. Shopify and WooCommerce), accounting ( e.g. QuickBooks and Xero), shipping, forecasting, CRM, and more. Together, these various integrations can help a manufacturer predict what its future inventory needs will be based on historical or real-time sales data, for example to ensure that inventory or parts are not depleted.
End of ‘made in China’ era
A major driver of demand for such software is direct-to-consumer (D2C) manufacturing, which has seen smaller, local manufacturers — or “micro-manufacturers” — remove many of the middlemen traditionally needed to get their products made.
“The rise of D2C manufacturing has sparked a minor manufacturing renaissance, giving consumers a wealth of options that ease the grip of brands that rely on mass production,” Kristjan Vilosius, co-founder and CEO of Katana, told londonbusinessblog.com . “As manufacturing moves closer to the increasingly conscious consumer, brands that rely on local production and inventory are gaining market share. In short, the ‘made in China’ era is coming to an end.”
This has been aided by modern technologies such as 3D printing and computer-aided laser cutters, which allow companies to produce goods on a smaller scale, away from centralized mass production factories. At the same time, the rise of online marketplaces, e-commerce software and the broader cloud computing movement have made it easier to gain greater control over the entire business process, from production to sales.
“Manufacturers already have a tech stack of tools like ecommerce platforms, shipping tools, and accounting software,” Vilosius continues. “What’s missing is a central source of truth that streamlines the flow of information and minimizes manual data entry and, as a result, human error.”
Legacy ERP software from, for example, Netsuite and SAP is usually aimed at larger companies. That’s why in recent years we’ve seen a slew of younger newcomers enter the fray with a lot of VC fanfare, with Katana and its ilk trying a more modern toolset built specifically for SMBs – and in Katana’s case specifically for SMB manufacturers.
“Supporting this new wave of manufacturers is critical – enterprise business suites such as NetSuite and SAP come with high costs and a plethora of features and functionality that exceed the needs of small to medium-sized businesses,” said Vilosius. “The ERP space is also known for poor user experience and user interface and low customer satisfaction. Many small businesses choose spreadsheets, despite being error-prone and difficult to scale as their business grows.”
Katana had previously raised about $16 million, the bulk of which arrived via the Series A round last year, and in the intervening months, the company claims to have quadrupled its annual recurring revenue (ARR), dropping its workforce from 30 to 140. grow and scale its customer base from “hundreds of microenterprises to thousands of customers in the SMB segment,” according to Vilosius. In addition, the company launched a open API for customers to build their own integrations.
With another $34 million in the bank, the company said it is well-funded to “bring manufacturing software into the digital age,” including rolling out “more advanced accounting integrations.”