Katana, an enterprise resource planning (ERP) platform for small and medium-sized manufacturers, has raised €35 million ($34 million) in a Series B round of funding.
ERP is a type of business management software that can be used for any function within a company, from marketing and risk management to supply chain management and beyond. Integrations are critical to any ERP software, as they typically involve taking data from disparate systems like HR, CRM, accounting and order management to generate insights and analytics – essentially, ERP is all about identifying potential problems and improving efficiency.
Based in Tallinn, Estonia, founded in 2017, Katana is an ERP for the manufacturing sector, with pre-built integrations for most of the most common tools a manufacturer might use, including e-commerce platforms (e.g. Shopify and WooCommerce), accounting (e.g. QuickBooks and Xero), shipping, forecasting. , CRM and more. Collectively, these various combinations can help a manufacturer predict what their future inventory needs will be based on historical or real-time sales data, for example, to avoid running out of inventory or parts.
The end of the era made in China
A big driving force behind the demand for such software is direct-to-consumer (D2C) manufacturing, which allows small, local manufacturers – or “micro-manufacturers” – to cut out many of the middlemen typically necessary to produce their products.
“The rise of D2C manufacturing has fueled a small manufacturing renaissance,” said Krisjan Vilosius, founder and CEO of Katana, o TechCrunch. In short, the era of ‘Made in China’ is coming to an end.”
This, with the help of modern technologies such as 3D printing and computer-aided laser cutters, allows companies to produce in small quantities away from centralized and mass-produced factories. Similarly, online marketplaces, e-commerce software, and widespread cloud computing have made it easier to control the entire business process, from production to sales.
“Manufacturers already have technology stacks such as e-commerce platforms, shipping tools and accounting software,” Vilosius continued. “What’s missing is a central source of truth that streamlines the flow of information and reduces manual input and, consequently, human error.”
Legacy ERP software like Netsuite and SAP are typically geared toward larger businesses, which is why in recent years we’ve seen many young startups enter high-VC fandom, with Katana and its ilk aiming for a more modern toolset for SMBs—and in Katana’s case, SMB manufacturers in particular.
“Supporting this new wave of manufacturers is critical—enterprise business suites like NetSuite and SAP come with many features and functions that exceed the needs of small to midsize businesses,” Vilosius said. “The ERP space is known for poor user experience and user interface and low customer satisfaction. Many small businesses choose spreadsheets even though they are error prone and difficult to scale as their business grows.”
Katana previously raised about $16 million, most of it in a Series A round last year, and in the intervening months the company has quadrupled its annual recurring revenue (ARR), grown its headcount from 30 to 140 and scaled. Its customer base ranges from “hundreds of small businesses to thousands of customers in the SMB segment,” Vilosius said. On top of that, the company has released an open API for customers to build their own integrations.
With another $34 million in the bank, the company says it is well-financed to “bring manufacturing software into the digital age.”