Manufacturing execution system (MES) player Visiprise Inc. has received its first major venture capital infusion since its 2002 inception, netting $16 million earmarked primarily for future acquisitions and to accelerate a key development partnership with SAP AG.
The funding round, disclosed yesterday, was led by Investor Growth Capital (IGC), along with partners RRE Ventures, Morgan Stanley Venture Partners, Canaan Ventures, and Wheatley Partners. This latest round brings the company's total funding to $18.3 million. As a result of the deal, IGC's Noah Walley and Phil Dur have joined Visiprise's board of directors.
Visiprise officials outlined a three-pronged strategy for the investment, explaining it wasn't money required to keep the business running, but rather to fuel future growth. First and foremost, officials said, the financing enables the Atlanta-based company to pick up some targeted acquisitions that will not only provide growth opportunities, but strategically expand the existing product line.
Visiprise Manufacturing lets manufacturers define, track, and report on real-time information from the shop floor, tying that data to enterprise systems -- the goal being to help them accelerate product delivery, optimize cost efficiencies and enhance product quality.
"Our products currently provide customers with 80% of what's required to address their manufacturing needs on the shop floor -- we want to provide them with 100% in some adjacent technology areas," explained Carter Johnson, Visiprise's vice president of strategy and business development. Specifically, Johnson pointed to quality, manufacturing planning, manufacturing engineering tools and scheduling as possible areas where Visiprise would look for acquisition targets to flesh out its software suite.
The funding will also be channeled to expand Visiprise's geographic presence, particularly to continue to build out a direct sales force in Asia. Visiprise will also leverage the capital to accelerate development of a turnkey version of its software based on SAP's NetWeaver and Xi technology, designed to further integrate business processes and data between enterprise systems and the shop floor.
The relationship, inked earlier this year, grew out of a handful of customers' demand for tighter integration between the two systems. With the investment, Johnson said, Visiprise can put more resources towards the SAP integration project without taking any people and funding away from its existing pipeline of new development projects.
The SAP relationship, coupled with industry drivers such as demand for regulatory compliance and traceability, are prompting manufacturers to take another look at MES, after years of lukewarm interest. That makes Visiprise a sound investment.
"We've looked at this market several times over the last few years, and while it's always promised to deliver, it's been disappointing," admitted IGC's Walley, who is managing director of the New York-based investment firm. "When you rub everything together, we think [Visiprise is] now a decent market opportunity. Exactly how fast it will grow over three to five years is not knowable, but we think it's fast enough to produce a decent return."
Visiprise, in particular, is a bright spot on the MES landscape, Walley said, because of its strong historical financial results and management team. Another strength: Visiprise's Web-based, J2EE architecture, which is essential for helping manufacturers view operations from a global perspective.
"What's so different about this space today is that manufacturers are being forced to take a global view of their operations," Walley explained. "To do so, you need a flexible, Web-based system, and the fact that these guys have [that] is a real positive."
Mike Burkett, research director for AMR Research Inc. (Boston), agreed that Visiprise is out in front on integration and architectural issues compared to the majority of MES players. "They are more forward thinking in terms of what they're doing in integration --they're much more tightly coupled to enterprise systems," he said, citing agreements with SAP as well as with UGS (Plano, TX), for integrating Visiprise into that firm's TeamCenter Product Lifecycle Management (PLM) platform.
Moving forward, Johnson says Visiprise will continue to be focused on integration between the shop floor and enterprise systems and on delivering a return for both its investor partners and its customers. With SAP recently acquiring Lighthammer Software Development Corp. (Exton, PA), a niche vendor delivering complementary manufacturing intelligence and collaboration software, Johnson doesn't rule out acquisition some day.
"Investors just put up $16 million and they want a return on that investment," he said. "Exit is a likely strategy for our business, at some point, whether it's SAP or another business partner."