Investment Notes: Switchboard

Investible is excited to announce that we have led Switchboard’s A$1.5m Seed round with participation from TEN13, AfterWork Ventures, Skalata, Archangel Ventures, Startmate, The Fund and various angels.

Electronic data interchange (EDI), which is a loosely organised set of technical standards to communicate data between businesses and systems, has been around since the 1970s. In the context of supply chains, this can include data for sending and receiving purchase orders, product information and inventory levels, shipping details, and invoicing and remittance.

However, as supply chains have become more digitised and globally interconnected, supply chain EDI has become increasingly complex and inefficient. For example, there is currently more than 14 commonly used supply chain specific EDI standards recognised by the UN, and each company has different data standard requirements. This means that exchanging data via EDI requires translating data from one company’s format to another. This becomes even more complex and manual as their number of trading partners grows. Each trading partner may also be using disparate ERP, warehouse management or transport management systems which are not built to automatically ingest this data in the correct format.

With the rise of APIs, this has made communicating supply chain data between systems a lot easier. However, API integrations still fall short of providing a seamless data transfer experience for businesses. APIs still need to be built and customised for each individual system (this can be highly complex for in-house systems) and requires dedicated company IT resources and time to setup.  

Unique solution which solves long-standing industry pain points

Switchboard has built a unique industry and system-agnostic software which leverages a universal data model and parser to standardise the EDI and API integrations between supplier, retailer, and third-party logistics (3PL) supply chain systems. This ensures that data sent is automatically populated correctly into the receiver’s system.

Customers can connect once to Switchboard and immediately exchange supply chain data with any trading partner in their supply chain (i.e. a one-to-many connection for EDI and API), if the system connection has been pre-built by Switchboard. This enables operations teams to dramatically reduce manual data entry (e.g. entering purchase order data from a PDF or email into an ERP system), thus improving accuracy and freeing up time for higher value tasks.

During our due diligence process, we were delighted to hear the strong positive feedback from Switchboard’s early customers, noting immediate improvements in data entry accuracy, time and cost efficiencies (e.g. less manual effort and resources required), and uplift in sales conversions due to the ease of integrating with trading partners.

Incumbent players in this space, such as legacy IT integration consultants, are services focused which makes it hard for them to scale. Additionally, they focus predominantly on building bespoke, non-reusable integrations which usually have long lead times. Switchboard has the potential to capture significant market share given the white space left by incumbents.

Potential to develop a scalable customer acquisition flywheel

As the company continues to grow, Switchboard has the potential to develop a scalable customer acquisition flywheel due to its network-based solution for a one-to-many connection for EDI or API.

For example, once Switchboard acquires a new customer, they can be introduced to that customer’s respective trading partners during the onboarding process. Subsequently, those trading partners could eventually become Switchboard customers themselves and enable the organic generation of new warm leads.

To accelerate self-service, Switchboard offers an onboarding widget which can be embedded within a customer’s website, for trading partners to instantly integrate their supply chain systems without the assistance of the Switchboard team.

These network effects become even more powerful once Switchboard starts to ‘ladder up’ to acquire larger customers with a high volume of trading partners (e.g. 30-50+).

Ambitious founder who has lived and breathed this problem

The supply chain system integration challenges mentioned above was exactly what Hugh Dixson (Founder & CEO) experienced first-hand during his time at Ofload, a digital freight management platform, as Head of Operations & M&A (employee #3).

Specifically, he felt frustrated having to manually input purchase order data sent by suppliers in PDF and email into Ofload’s ERP and warehouse management system due to a lack of API and EDI integration between both parties’ systems. Having experienced these problems intimately, he is passionate about building a scalable industry-wide solution which has global applicability across all supply chain segments.

Prior to Ofload, Hugh spent almost 2 years at Uber within their strategy and operations team, focused on supply management and growth, and was a former management consultant at BCG.

Investible is thrilled to be supporting Hugh and the Switchboard team as they look to continue building and scaling out their solution across supplier, retailer and 3PL networks globally.