An Auckland software start-up that includes a former Xero head of engineering has raised $2.2 million in a pre-seed round.
Cotiss was founded by Matt O’Halloran, Matt Whiting, and Harry Wilde, who pooled their savings to create a product for managing tenders. The trio say it’s aimed at procurement teams that are small - even if they might sit inside a large Government department, council, healthcare provider or corporate. They pitch it as a cheap, easy solution that’s more nimble than incumbents.
The young firm only officially started selling its product three weeks ago and has just begun to on-board its first 40 or so customers.
“They include local government in New Zealand and Australia, a couple of central government agencies, a healthcare provider and a mid-sized bank,” Wilde says.
The raise was led by Australasian VC Blackbird Ventures, with participation from Icehouse Ventures, AfterWork Ventures, Co-Ventures and the VC wing of the Phase One business incubator.
Cotiss has already made a signature hire - John Gregoriadis, the aforementioned ex-head of engineering at Xero (which he left at the end of last after a seven-year stint; that is before the current trim). Before that, Gregoriadis was lead engineer at Vend, the Auckland point-of-sale software firm sold to Toronto-listed Lightspeed for $455m in 2021.
The aim now is to fill out the engineering team on the back of Gregoriandis, and triple staff numbers (currently 11) over the next 18 months.
The funds will also be used for further expansion in Australia and launch into North America this year.
The raise also means the three founders can start drawing a salary for the first time, followed by two years of bootstrapping.
“It was a bit of a readjustment going from being an ad strategist in Melbourne to living at my mum’s and sleeping on the office couch,” Wilde says.
Things picked up a little when Icehouse Ventures chipped in $40,000 and offered free space at its office.
“They were the most energetic, loudest group in the office, most of the noise being them working their way through the phone book calling anyone they could to sell them a concept of procurement software,” Icehouse Ventures partner Barnaby Marshall says.
“There are few founders as dedicated to sales and hustle.”
Wilde says although they are now visiting customers in-person in New Zealand and Australia, with the US market they’re using simple cold calls - “and we’ve been able to book meetings”.
The co-founders are now gauging whether to put boots on the ground in North America - something that could easily eat up half their raise, Wilde says - or attack the US market remotely from New Zealand. Whiting says a US office is inevitable, but it might come after a future funding round.
Procurement has been a flashpoint over the past few years in New Zealand - especially in the tech sector, where lobby group NZRise has complained that the Government’s tender system is stacked against SMEs.
The Cotiss crew say their software is designed to manage a tender that could be presented to the world via the Government’s online tender system, Gets (the Government Electronic Tender Service), rather than serve as an alternative.
Regardless, many of NZRise’s beefs are with policy rather than technology. For example, the ginger group says high-cost activities are at the start of the Crown tender process, rather than the end, creating a barrier of entry for local players next to multinationals.
Still, any tool that will help put a more democratic tender together can’t hurt.
“We manage the process behind Gets, from planning your procurement to putting it out, evaluating responses then managing those suppliers,” Cotiss co-founder Wilde says.
Fellow co-founder Whiting says while Cotiss has “a very guided process” that’s a lot more user-friendly than more traditional procurement software. “From our research, 92 per cent of people in small to medium procurement teams are not using a specialised platform. We’re really trying to get people off Excel and emails.”
Cotiss also pushes a PwC survey a PwC survey has shown 70 per cent of Australian and New Zealand businesses are actively pursuing cost reduction through procurement.
What drew Wilde from the ad industry to procurement?
“I’ve always been quite fascinated with procurement,” he told the Herald.
“I studied politics and economics at university, and procurement is an intersection between the public and private space. I think of it as like the connective tissue - which is where the name Cotiss comes from. I ended up going to all these procurement catchups and really began to identify the problem from there.”
The product he and his co-founders developed was sufficiently impressive to get Icehouse to put in more money, and for Australasia’s largest VC player, Blackbird, to lead the pre-seed round.
“Procurement departments, hindered by outdated tools and processes, are hard pressed to manage what are highly collaborative and compliance-driven processes. Cotiss redefines procurement for small to medium teams with user-friendly software, shifting the focus from managing processes to driving outcomes through strategic sourcing. We’re delighted to partner with the Cotiss team as they embark on their journey to democratise best-in-class procurement,” Blackbird associate (and NZGCP alumni) James Palmer says.
Former Xero procurement director and current CEO of procurement consultancy Esby and Co, Sarah Blackie says, “Smaller organisations and their procurement teams have been overlooked and underserved for years when it comes to fit-for-purpose sourcing software. Where software is absent, there’s too much paperwork, costly inefficiencies and frustration. Ultimately, these inefficiencies prevent leaders from focusing on sourcing strategically, sourcing locally and supporting our supplier ecosystem to act sustainably. Procurement should be a much more enjoyable experience than it currently is. That’s why it’s so great to have Cotiss helping organisations to improve the procurement experience for all.”