Backing a category creator: our partnership with Celonis
First published on June 26, 2018 Any start-up is an exercise in bravery and ambition, but the bravest of all venture into fields that are themselves unproven or non-existent. Celonis is one of those businesses, and we are delighted to announce our follow-on investment in the company today.
Celonis, valued in today’s Series B round at $1 billion, can claim much of the credit for how quickly process mining has become established as an essential tool for some of the world’s largest and most influential companies. For the company itself, the rapid adoption of process mining has meant 5,000% growth over the last four years, and 300% growth year-on-year, making it one of the fastest-growing software companies in the world.
Since 2016, Celonis has grown from a team of 50 to one of over 300, while retaining its strong culture, its impressive staff retention record and its unrelenting sense of ambition. That is largely down to the excellence of its founding team, who bring an enviable combination of high-level vision, product leadership and business acumen to the table.
When Alex, Bastian and Martin started the business as students in 2011, process mining was an academic niche. In a recently published Market Guide on process mining, Gartner now highlights that they expect the market for process mining technology to triple or quadruple in the next two years, and that Celonis is the clear market leader.
The company has built a platform that integrates with common enterprise applications such as ERP and CRM to help businesses analyze complex operational processes with the goal of improving their efficiency. The platform extracts individual process event logs from the underlying application databases (e.g. prospect interactions in CRM, payment receipts in ERP) and groups them by process ID and underlying time stamp. It then allows users to visualize each individual process, see how many steps were involved, in what order and for how long. This results in operational transparency and helps identify potentially costly outliers and track best practice compliance.
By breaking a company’s operations down into its constituent processes, visualizing them and showing what can be improved and how, Celonis targets to unlock the 10–20% of margin that it believes every business loses as a result of hidden inefficiencies. For example, in an order-to-cash process, customers can use this information to spot operational inefficiencies (e.g. by understanding in what % of cases invoices have to be re-issued due to structural reasons that can be resolved, leading to shorter cash cycles) and implement and track relevant changes.
In contrast to traditional consultancy and business intelligence services, Celonis works quickly, delivering actionable insights and a tangible return on investment: for customers such as Vodafone and Siemens, this has led to significant improvements in areas from reducing cost-per-process to raising the proportion of on-time deliveries.
With Siemens, for example, Celonis has been an integral part of its digital transformation. The platform monitors 30+ processes globally across 5,000 users in global business services, with data sitting in 70+ ERP systems and 30+ 3rd party systems. They’ve managed to drive 14% higher on-time deliveries and 21% higher alignment on customer requests.
The most exciting part is that the team is only just getting started. This is a product which can apply to almost any business, in any industry, in any market. There are few businesses that can claim to be so efficient that they would not learn something from the unforgivingly honest light that process mining shines. And, as more firms look to extract value from the data pools on which they sit, the market is set to grow and grow.
We first started working with Celonis two years ago, leading the Series A round. It was part of our investment theme centered on data insights and automation for enterprises, from Qlik, which helps companies to mine and visualize their data, to UiPath, a leader in the related field of robotic process automation. In Celonis we saw all the ingredients for another leap forward in the field of enterprise data insight, led by the kind of radically ambitious, relentlessly focused team that we love to back.
During this time, it has been a privilege to partner with the team on this journey, as they have grown rapidly into the US, expanded their client roster to include companies such as 3M, Adobe, Dow, Exxon, General Electric, Honeywell, ING, L’Oréal, Roche or Santander and secured a major distribution partnership with SAP. Alongside general advice, our role has focused on talent acquisition, including the hires of a CMO and a VP Sales with US experience, supporting Celonis’ expansion into what is its most important market.
What we have always admired about Alex, Bastian and Martin is their ability to match ambition with consistently effective execution: seeing several steps ahead at every stage, and never easing up on either growth or delivery. When you are trying to pioneer a new field as well as build a business, you face all the usual start-up challenges and more, including the need to educate the market on the benefits of something it has not previously thought about. That Celonis has achieved all of this is a testament to the strength of its organization as well as the credibility of its vision and product.
Celonis has not just grown into a very successful company. It has also created a category that is redefining what we understand by business intelligence and the possibilities of data analysis in the enterprise. The opportunity ahead now is large, and we are thrilled to be continuing our partnership as Celonis accelerates its own growth and that of the entire process mining industry.