Austin software startup SourceDay has landed $3.5 million in funding to continue expanding its operations, the company said Tuesday.
The investment is the largest to date for SourceDay, which sells products that automate the process for manufacturing companies to fulfill their purchase orders.
The funding -- from three capital venture firms, including Austin-based Silverton Partners -- will be used to add employees and expand operations, said CEO Tom Kieley.
“(The investment) further legitimizes the problem that we are solving in the market,” Kieley said. “This partnership will help us with customer acquisitions and help hire more executive talent.”
California-based Draper Associates, as well as ATX Seed Ventures, joined Silverton in the investment. The deal closed on June 29.
Since then, Kieley has hired three full-time employees, including a vice president of marketing, bringing his staff to a total of 12. He said he plans to use the new funds to hire about six more full-time employees by the end of the year, including software developers and a vice president of sales, which he said will be the “most important” hire.
Funds will also be used for product development such as automating the payment process for vendors, as well as indirect and direct sales, Kieley said.
“SourceDay has become a mission-critical tool for companies managing their purchase orders,” Draper Associates team member Billy Draper said in a written statement. “We spoke to customers in various sectors and it became clear that the SourceDay software has created enormous efficiency and productivity gains.”
SourceDay launched in 2013 and received its first round of outside funding in 2015, a $750,000 round that was led by ATX Seed Ventures.
Since starting, the company has grown to a customer base of more than 30 that includes local corporations such as Austin Foam Plastics, as well as out-of-state companies such as Universal Electric Corporation. SourceDay operates in six countries throughout North America, Asia, Europe and South America, according to Kieley.
Manufacturers that have used SourceDay, which operates in the cloud and centralizes purchasing orders for buyers and suppliers, have improved delivery time by an average of 35 percent, according to the company.
The startup is not profitable yet, but Kieley said revenue and customer base have both expanded 10-fold in the past six quarters.
“Some of the biggest challenges have not been funding but with hiring the right experience of people,”he said. “The biggest challenge is disrupting the status quo. Our customers have been doing the same manual processes for 30 years. We have to educate the industry on a more automated way of doing things.”
SourceDay is planning to launch a smartphone app by the end of the year and will also use the new funds to expand its network into larger markets.
“We’re excited about the growth and excited about being in Austin,” Kieley said. “There’s lots of great talent (here) to hire from.”
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