Supply-Chain Tech Provider Project44 Delays Potential Public Offering

The backing was led by Generation Investment Management LLP, a London-based sustainable investment firm whose founders include former U.S. Vice President

Al Gore,

and A.P. Moller Holding, a financing arm of the owners of Danish shipping giant A.P. Moller-Maersk A/S.

The new cash follows a $420 million funding round in January that valued project44 at $2.2 billion and a $202 million round less than a year earlier that had executives looking at a potential initial public stock offering in a hot market for supply-chain technology firms.

The appetite for public offerings has collapsed this year, however, as the global economy stumbles toward a possible recession amid high inflation, upheaval from Russia’s invasion of Ukraine and receding consumer demand. The IPO market is on track for its worst year in decades, and technology companies that pitched themselves as critical tools to make sense of supply-chain disruptions may find less demand now that bottlenecks are easing.

Digital freight-matching startup Transfix Inc., for instance, last month canceled its plans to go public through a merger with a special-purpose acquisition company, saying it will instead seek another round of venture-capital funding.

Funding for supply-chain technology startups has also tapered off this year, according to analytics firm PitchBook Data Inc., as venture-capital firms have reined in deal making. Venture-capital firms invested $8.6 billion in the sector in the second quarter, down nearly 40% from both the first quarter and the second quarter of 2021.

Jett McCandless, founder and chief executive of project44, said about $200 million of the January round went toward buying out early-round investors rather than toward working capital, a process he said prepares the company for a longer-term outlook. “You want to get that early capital off so you have long-term investors as you go toward the next milestone,” he said.

Mr. McCandless said project44 can continue to expand without going to public markets over the next couple of years based on its existing investment and cash flow.

“We have enough capital on our balance sheet without doing an IPO to grow while continuing to innovate. We can still have incredible investment in innovation and be competitive and be in charge of our destiny,” he said.

Mr. McCandless said project44 was in position to file paperwork in June for a future public stock offering. “But these are uncertain times, so we shut that down,” he said.

The company is now looking at 2023 or 2024 for a potential debut in public markets, with an IPO next year “if the market is really hot,” Mr. McCandless said.

A public offering, he said, would allow more venture-capital and private-equity investors to cash out in public markets while letting the company have continuing access to capital.

The role of Generation Investment Management highlights a growing focus for project44 on sustainability as supply-chain bottlenecks clear up and the role of what the company calls its visibility software in addressing disruption becomes less pressing.

“About 35% of our revenue comes from Europe. Sustainability is top of mind for them, particularly Scope 3 emissions,” Mr. McCandless said. Scope 3 emissions are those produced by contract suppliers in a company’s supply chain.

Mr. McCandless said project44’s tracking information can provide detailed data on the movements of ships carrying a company’s goods that contribute to carbon emissions.

France-based shipping line CMA CGM SA also invested in project44 for the first time, joining existing investors Goldman Sachs Asset Management,

TPG Inc.,

Emergence Capital Partners, Chicago Ventures, Sapphire Ventures, 8VC, Sozo Ventures and Omidyar Technology Ventures.

Write to Paul Page at [email protected]