Procurement startup VendorPanel joins first cohort of Microsoft’s ScaleUp program, just a month after raising $2.35 million
Wednesday, September 19, 2018/
Microsoft has named the startups taking part in its Sydney ScaleUp program, marking the first cohort going through the initiative in Australia.
Tailored towards growth-stage startups, the program gives participants access to Microsoft tools and its network of customers, in a bid to help them accelerate their ambitions, without taking any equity in the startups.
The 13 participants in the first cohort include AI startup Hyper Anna, which raised $16 million in Series A funding in August last year, and accounting startup Karbon, which raised $7 million in June this year.
Also joining the cohort is VendorPanel, a marketplace and procurement platform startup that has also recently raised capital. Founded in 2008, the startup was bootstrapped until last month, when it raised $2.35 million in Series A funding.
The funding round was led by Microequities Venture Capital Fund, and also included investment from Leigh Jasper and Rob Phillpot, co-founders of construction management platform Aconex.
VendorPanel founder and chief James Leathem tells StartupSmart the Microsoft program is not about learning how to run a business. Rather, it can provide “a faster track to partnering with Microsoft”.
Participants have “a mature tech business, albeit young and nimble”, he says.
VendorPanel, for example, has some 1,200 corporate clients on its books, and has facilitated procurements worth $2.4 billion to date, Leathem says.
The program allows the startup to work with Microsoft to get the best results out of their technology, “working together to help shared customers get the best out of it”, he adds.
For VendorPanel, the timing was “somewhat serendipitous”.
While Leathem heard about the Microsoft ScaleUp program fairly late in the game and “squeaked in”, he says partnering with Microsoft has always been part of the startup’s game plan, he says.
“It made sense for us to work with Microsoft,” he adds, but “navigating the ecosystem can be pretty challenging”.
The ScaleUp program offers support to help participants grow, as well as technical support, and the opportunity to work with Microsoft specialists.
Through the program, VendorPanel can “leverage the smarts at Microsoft”, Leathem says.
“It’s great to have someone that our CTO can talk with about specific things we’re doing around our process and our infrastructure,” he adds.
The $2.35 million raised last month was pegged for growing the VendorPanel team, expanding internationally into Canada, the UK and the US, and further developing its product.
“We’re not really changing our tech strategy at all,” Leathem says, but the program means the startup is “able to do some things more quickly”.
Leathem’s advice for other startup founders is to try to understand which opportunities are worth grabbing and which are distractions from the core business.
Especially when you’re bootstrapping, the opportunity for a “flash in the pan of cash” can be “really compelling on the surface”.
Sometimes “you don’t know if it’s a distraction or if you’ve found your MVP”, Leathem says.
Founders should be pragmatic about the decisions they make, holding opportunities “up against our objectives, our plans, our vision”, without “just taking shiny things when they pop up,” he adds.
He adds that part of what helped VendorPanel get into the Microsoft ScaleUp program was the capital raise, which “speaks volumes about where you’re at”.
Embracing the Microsoft opportunity was “a good way to leverage the amount of work that it takes to raise capital”, he says.