Mercado Labs, a Dallas-based technology startup that helps small and mid-size importers manage the complexities of international trade, has closed a $2.5 million funding round led by Ironspring Ventures and joined by new investor Supply Chain Ventures.
Founded in 2018, Mercado’s platform focuses on the “first mile” — the first 120 days — of the global supply chain, connecting buyers and sellers to help businesses better plan, move and ship products. The cloud-based platform offers more than 70 procurement, ordering, and shipping features, from vendor vetting and quoting to visibility of orders, supply and logistics processes.
U.S. companies purchase about $2 trillion worth of inventory annually from abroad, CEO and co-founder Rob Garrison noted, yet the primary tool to manage all of that stuff is Microsoft Office.
But Mercado does more than drag legacy spreadsheet and email systems into the digital age. Its broader goal is to use digitization as a starting point to drive greater automation, collaboration, transparency and predictability, helping companies conduct business “better, faster, cheaper,” Garrison said.
In recent years, dozens of companies have set their sights on automating global supply chain processes, helping importers better manage the dizzying complexity that is international trade, as goods traverse dozens of companies, departments and individuals across geographic, cultural and governmental barriers.
Two factors differentiate Mercado from other software solutions, according to Garrison.
First is its “heavy focus” on the first mile of the supply chain. The average time it takes to pay, buy and move products from Asia is about six months, with the actual move taking about one month, Garrison said. Mercado’s core competency is the five months before that, the time when delays, discrepancies, damages and defects often happen, eating into a company’s bottom line.
The second key differentiator: Garrison emphasized that Mercado is a platform, not a point solution. As such, it doesn’t consider startups like Project 44, a visibility provider, or Freightos, a company that helps freight forwarders automate quotes for container shipping, as competitors. Rather they are partners that can be integrated into Mercado network.
The company has a third arrow in its quiver: affordability. One exception to the Microsoft Office solution, Garrison explained, is GT Nexus, a company that built the first cloud-based international supply chain management platform. But GT, which sold in 2015 for $675 million to enterprise software provider Infor, targets large companies with deep pockets — e.g., the Targets and Dow Chemicals of the world.
Mercado aims to democratize cloud-based supply chain management, offering cutting edge technology and infrastructure at a more accessible price point for the country’s 300,000 importers, Garrison said. “We can now serve all importers, not just the 1%.”
GT Nexus founder John Urban is a member of Mercado’s board.
Mercado claims 20 customers, according to Garrison, and a number of further deals are set to close in the coming months as companies feel the pressures caused by recent global events.
“With emerging trade compliance issues, increasing duties and tariffs, and growing supply chain complexities as sourcing shifts among countries, importers need a platform to manage their goods flow in these difficult times,” Dave Anderson, managing general partner of Supply Chain Ventures, said in a press release.
Mercado, he said, “is the choice of leading companies to avoid costly mistakes in paperwork and logistics.”
Along with the investment, Ironspring Ventures Managing Partner Ty Findley will be joining the Mercado Board of Directors.
“The current pandemic has rapidly accelerated Mercado’s customer traction as importers realize both the growing complexity associated with conducting international trade and the need for a solution to reach into the earliest phases of purchaser and supplier collaboration when a purchase order is placed,” Findley said in the release. “Mercado does just that and more.”
Mercado will use the new funds for market outreach, while continuing to invest in advanced technologies such as machine learning, Garrison said.