Tealbook Raises $14.4 Million To Improve Procurement With AI

With producers and their customers alike scrambling to identify, learn from and repair the supply chain breakdowns we saw last year when Covid-19 struck, all functions are under intense scrutiny. Chief among those is procurement, where many businesses are discovering that despite well-established ERPs and other digital systems in place, purchasing still often relies heavily on manual processes, tired “partnerships” (usually just longstanding default supply sources), and precious little information.

Toronto-based machine learning startup Tealbook aims to change all that. Today they’re wrapping up a $14.4 million Series A funding round led by RTP Global, a venture capital firm focusing on early-stage technology investments. The new funding adds to Tealbook’s seed rounds in 2017 and 2020, bringing their total funding to over $22 million.

Founded in 2014, Tealbook was originally focused on building an interface through which companies could collect and disseminate procurement data to bridge gaps created by traditional procurement processes. But in 2019 they changed that focus. “True agility has to come from data,” explained Stephany Lapierre, Tealbook’s founder and CEO. “But even a few years ago, the technology wasn’t there.” Now that the technology has caught up with the need, Tealbook’s focus has shifted to using AI and machine learning to sift and evaluate vast amounts of supplier data, in concert with its customers’ existing procurement software and systems.

“The inspiration was my own personal background,” said Lapierre. “Early on in my career I worked with Fortune 500 companies to improve procurement. Later I supported hyper-growth companies. With experience, I noticed a big gap in getting good procurement information in real time. Supplier data was very siloed, and difficult to reconcile. We had to synchronize it manually, with tremendous amounts of data. Even though these companies have spent millions on their systems, they still don’t have the information they really need.” So she set out to fix that by combining systems and cleansing the data.

“We aggregate data from 400 million data sources,” Lapierre said. “We use machine learning to validate the completeness and accuracy of the data, and to analyze suppliers based on location, category, history and size. We know vendor qualifications—we’ve identified over 800,000 small and diverse certificates, so we can understand how well suppliers are trusted based on things like GDPR and ISO certifications. We plug all that into a data foundation, from which we build a supplier intelligence system and families of similar suppliers.”

With that cleansed and harmonized data, procurement professionals are able to make better decisions and to find more strategic business opportunities, including the usual cost savings efforts through more and better competition. In addition, it highlights critical areas laid bare by the pandemic such as ready alternative suppliers, opportunities to shorten supply chains, and critical intelligence on abilities of, and risks with, existing suppliers. “We see hundreds of millions of dollars in value here,” said Lapierre. “Having all this information at hand, with good data and new insights, will impact both top and bottom lines.”

There are other value propositions as well. “Identification of diversity spend is an increasing necessity,” Lapierre continued. “We had a business case where a client couldn’t document their full spend when they were trying to get business with a large non-profit organization. They were able to land a contract worth $100 million when we were able to identify their total spend for them.”

Another potential benefit is validation of capabilities in the absence of certifications. An example is the increasing attention purchasers are paying to supplier diversity credentials, and the business opportunities they represent for suppliers. “When it comes to supplier diversity, only 5% of those who qualify are certified,” said Lapierre. “It often takes 5 years for a return on the investment to certify a diverse or minority association. We’ve built a documented self-certification system within Tealbook, so companies can still compete for those opportunities as they work towards certification.”

With its new funding and an expanded staff of about fifty, Tealbook is aiming to grow. “We have an opportunity to be the market leader, and in fact, Kearney recently positioned us as the only example of the data foundation for procurement transformation,” Lapierre said. “What we built is an out-of-the-box solution that you can plug in to all existing enterprise systems, and immediately have the totality of information you need for procurement. Tealbook lets you find the best and brightest suppliers. That’s especially critical for small companies, giving them new ways to innovate.”

It’s critical for companies looking at pandemic impacts as well. “It’s more important than ever to have good real-time information about your suppliers,” said Lapierre. “You need it for risk management, and for contingency planning. A good CFO today had better be asking questions about supplier data strategy, especially when investing in large, scaled procurement systems that depend on good data. We’re changing the mindset around data. We help you fully optimize your entire supplier base and the millions of dollars they represent for your business.”