Process mining and execution management vendor Celonis has secured an additional $1 billion in funding, bringing the company’s post-money valuation to nearly $13 billion. At a time when the macro-environment is dampening some enthusiasm in the B2B technology sector, Celonis appears to be accelerating its market opportunity as it aims to provide value for buyers that are struggling to navigate the global economic headwinds.
Celonis has gained a solid reputation in recent years for delivering huge efficiencies for it customers via its Execution Management System, which not only analyzes the data from a company’s underlying systems to visualize processes and inefficiencies, but then also provides tooling to quickly apply fixes and automate these across processes.
Some examples include Deutsche Bank saying that it was able to use Celonis to help deliver over EUR 60 million in cost savings, just from improving the efficiency of 40 processes, and BP saying that the vendor’s process mining capabilities were key in helping it identify $2.5 billion in cost savings.
This week the vendor announced that it has secured $400 million in equity and $600 million in revolving credit to help accelerate its go to market strategy. This builds on the company’s June 2021 $1 billion Series D funding round, which followed a Series C of $290 million in November 2019, a Series B of $50 million in June 2018, and a Series A of $27.5 million in June 2016.
The $400 million Series D extension is led by the Qatar Investment Authority (QIA) and includes new blue-chip investors Activant Capital, a fund advised by Neuberger Berman, Alta Park Capital and Commonfund Capital. And the $600 million debt facility was led by KeyBanc Capital Markets, with Goldman Sachs, HSBC Ventures, J.P. Morgan, Morgan Stanley Senior Funding, Inc., Citibank, and Deutsche Bank acting as joint lead arrangers.
diginomica got the chance to speak with Alex Rinke, co-CEO and co-founder of Celonis, about the news. Rinke says that the additional capital will give the firm flexibility to double down on its organic growth opportunity, whilst also leaving options open for any strategic acquisitions. He explains:
The reason that we are doing this is because there is a huge opportunity for us to expand our position in the market, both from a customer perspective and a platform perspective, over the next few years.
We are always looking at the adjacencies in the marketplace - what are other companies doing that could be interesting?
Funding for scaleups and startups is retreating and going down, that’s not true for us. We can expand the scope of our platform through organic investment, which we are doubling down on, as well as be open to potential strategic partnerships or acquisitions. We just want to build on the opportunity and this capital gives us additional flexibility. But it wasn’t raised to fund a specific project.
Rinke adds that whilst some other vendors are softening their forecasts as a result of the macroeconomic environment, this is precisely the reason that Celonis is seeing accelerated success from buyers. Rinke argues that there is a perfect storm of challenges facing customers at the moment - inflation, suppressed demand, and supply chain angst - that tie directly to the value that Execution Management can bring. He says:
When I think about our customers right now, they have three big challenges. One is inflation, how do you deal with that? All the prices are increasing and you can’t always just pass that on to consumers. So your margins are under pressure.
The second challenge is if the recession hits and consumer demand comes down. I think people are generally not sure what demand will be over the next few quarters.
And then the third issue is supply chain - getting the right stuff at the right time at the right quantity. If you combine all of that, the only answer you really have is to optimize. We’ve got one customer that was able to save $150 million with just one use case by eliminating invoices that they used to create twice, because of system and process error. There’s just a tremendous opportunity to optimize things without impacting the consumer in any way.
With margins under pressure and demand uncertainty, companies are looking for ways to increase efficiencies and productivity. The argument being that you can’t keep slashing budgets and hoping to survive extended periods of uncertainty - you have to operate more efficiently, using data. Rinke uses supply chain as a specific example of how companies can use Celonis to remain agile and navigate the ongoing changes. He says:
One of the most important things in supply chain is lead time management. Lead time management is the time it takes for you to get all the things you need to produce your product. These lead time systems have been built over years and years and now they are all wrong. We have seen that on-time shipments have dropped substantially in recent months. What can you do?
You need real-time intelligence about your processes and insights across the business to understand, at a very granular level, how you need to adjust these things and run the supply chain in this new environment.
And then you need to constantly react, right? If another city in China shuts down, or there’s another wave of the pandemic…this entire way of how you used to operate your business, isn’t transferable.
That’s where we can help companies drive value, optimize, get transparency and run things in a data-driven way. And we do it very quickly. Within two or three months - and we are talking big organizations - their first use case is live and they’re seeing results. This time to value is really, really important.
As ever, for some, with crisis comes opportunity. Celonis recognizes that it is well positioned to deliver value for buyers that are looking for answers during periods of deep uncertainty. Not only that, but Celonis’ proposition ties directly into the broader trend of helping companies digitize their processes, rather than just lifting and shifting them to the cloud. This is all about changing the way you operate and companies can no longer operate the way they did previously, with the hope that they will survive the disruption. The focus now for Celonis needs to be on execution and ensuring it keeps delivering those outcomes for customers, and then showcasing them to the market to gain further momentum.