Sequoia, Index Ventures back German supply chain AI startup Tacto with €50m financing

Tacto, the AI-based operating system for future-proof supply chains in the SME sector, has received €50 million from Sequoia Capital and Index Ventures. Existing shareholders Visionaries Club, Cherry Ventures and UVC Partners are also participating in the financing round.

André Petry, CEO & Co-founder, Tacto: "Increasing regulation and disruptions in supply chains pose major challenges for our economic backbone, the industrial SME sector: The cost base is rising, material supply is at risk and the business outlook is uncertain. Tacto is developing a software solution for future-proof supply chains for and together with SMEs in response to the challenges of today and tomorrow. The financing round is a vote of confidence in our product, our team and our customers. The additional capital will allow us to further invest in our technology to help our customers remain competitive amidst ever-increasing supply chain complexity."

Purchasing is the key to solving supply chain problems, but affected companies often lack the right tools. Around 50% of the costs of an average industrial company are incurred when purchasing production materials. The complexity of managing hundreds of production-critical suppliers and tens of thousands of materials is enormous. Due to the lack of suitable tools, the majority of purchasing organizations in medium-sized companies still rely on manual processes and decentralized, error-prone Excel spreadsheets. The increasing challenges in supply chains in recent years, such as wars, climate change, regulation and inflation, have made it clear that European industry must future-proof its supply chains in order to remain competitive.

As an operating system for future-proof supply chains, Tacto is the answer for medium-sized industrial companies. The AI-based software enables strategic supplier management, straightforward handling of compliance with ESG regulations and efficient and sustainable material purchasing at optimized conditions. Manual supplier processes can be intelligently automated. For example, customers are enabled to implement the Supply Chain Due Diligence Act (LkSG) in a legally compliant manner and without additional personnel costs. At the same time, Tacto's AI can identify cost savings of up to 10% of the purchasing volume by continuously evaluating all data along the supply chain (e.g. cost drivers such as raw material and energy prices).

Matthias Schlotter, Purchasing Manager, Schwäbische Werkzeugmaschinen: "Tacto is our partner for the digitalization of purchasing, from the automation of supplier management to negotiation support for cost savings. Without Tacto, we would have to hire several additional people in times of skills shortages to counter disruptions and comply with increasing regulation. With Tacto, we can focus on value-adding topics. For example, we can analyze all supplier data and cost drivers in real time to prepare for a supplier visit at any time at the touch of a button, resulting in significant time and cost savings."

Tacto's customer portfolio is made up of medium-sized industrial companies from all sectors that manufacture a diverse range of physical products from board games to cleaning agents and tunnel boring machines. They manage several billion euros in purchasing volume and hundreds of thousands of suppliers through Tacto. The customer-oriented approach based on measurable time and cost benefits in purchasing is also reflected in customer loyalty, as not a single customer has ever terminated their cooperation with Tacto. This convinced leading global investors, Sequoia Capital and Index Ventures, that Tacto is the solution for future-proof supply chains in the SME sector. Both investors share the strategy of investing in leading companies at an early stage and helping to build them up over the long term.

Luciana Lixandru, Partner, Sequoia Capital: "With unprecedented pressure on global supply chains, industrial companies are realizing that their suppliers are as strategically important as their customers. After closely analyzing the procurement challenges faced by mid-sized industrial companies over the past few years, we realized that future-proofing supply chains is one of the most pressing issues of our time and Tacto is developing a real technological answer. When we met André and the team, we knew that Tacto would be the company that would revolutionize procurement for these companies. Germany is the ideal place to start because of its strong SME sector."

Carlos Gonzalez-Cadenas, Partner, Index Ventures: "Supply chains have been heavily burdened by a wide variety of macroeconomic and regulatory challenges and the increasing complexity of globally networked production. Many companies are struggling to manage everything at the same time, especially given the growing shortage of skilled labor. Tacto's product uses AI to help companies optimize the multitude of supplier relationships and materials, reducing both complexity and cost. We look forward to working with André, Johannes, Nico and their team to respond to the increasing demand."

The newly acquired capital will be used to accelerate product development and invest significantly in AI. The aim is to help customers automate all manual supplier and compliance processes, proactively achieve savings by optimizing purchasing costs and reduce emissions through sustainable procurement. Tacto intends to further expand its strong customer base in the industrial SME sector in order to create future-proof supply chains together with its customers.

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