Cofactr is a logistics and supply chain technology company that provides scalable warehousing and procurement for electronics manufacturers. The company announced today that it has raised $6 million in seed funding to “lead the next generation of efficient hardware materials management.” The company settled for $25 million in SAFE notes. We spoke to the company’s team to learn more about their vision for the future.
Cofactr solves various challenges for electronics manufacturers through pre-production, third-party logistics services and supply chain automation. By offering these products as an integrated strategic solution, the goal is to enable hardware manufacturers to reach production volumes without investing in dedicated facilities or the core counts historically necessary to manage electronic components.
“Both Phil [Gulley, the company’s CRO and co-founder] And I am driven by the desire to solve problems. “Prior to Cofactor, we started in the entertainment industry with our previous company Bayside Digital on the hardware engineering and solutions side, growing to support companies like Zoox, Google and CrowdStrike with product and custom hardware to market,” he said. Haber, Cofactr co-founder and CEO in an interview with TechCrunch. “The challenge we faced and saw reflected in our customers’ processes was that building and scaling hardware was incredibly tedious compared to software. After selling BeSide, the electronics supply chain and logistics was the biggest and most personal problem we had to solve.
The company told me that the current trend toward cofactor is not entirely linear. The company originally built and ran a contract manufacturer for circuit board meetings, but realized that wasn’t the right context for solving these problems. From there, the company evolved to build electronics-based third-party logistics and procurement automation.
“Having worked in hardware and software, we’ve had the opportunity to experience both ecosystems and know how much easier things can be when technology bridges the gap between ideas and scale,” Gulley said. “Cofactor is born insight. It is the company that we wished for when we were on the engineering side of the table.
Cofactor co-founders Matthew Haber and Phil Gulley. Image Credits: Cofactor (Opens in a new window)
The investment round was led by Bay Capital Ventures along with Y Combinator, Broom Ventures, Cathexis Ventures, Sweet Spot Capital, Pioneer Fund, Seed River, Litani Ventures, Correlation Ventures and a few angel investors.
“The big players at the main table are Bain Capital Ventures (BCV) and Y Combinator. YC helped us focus on finding and delivering the things people love most about Cofactr, and set us up with Ajay Agarwal at BCV, which immediately felt like a match. The BCV team covers hardware, logistics and He understands the opportunities that can come out of a business that integrates software into a single solution, as well as the challenges that come with building in multiple areas at the same time,” Gulley says.
Investors, on the other hand, see a future where Cofactor Group’s electronics will be in doubt about how they are manufactured.
“When I first met with Cofactor’s founders, I was impressed by their understanding of the challenges of electronics procurement. We’ve never seen anything like the integrated software and logistics system they’ve built. Cloud procurement software, supplier network and shipping, customs management, lien insurance, inventory, kitting and shipping. It combines a turnkey logistics platform that handles management. “With the Cofactr platform, hardware manufacturers can find electronic parts, confirm pricing, order parts, handle replenishment and ship parts to partner manufacturers. Behind the scenes, Cofactor handles everything.
Cofactr appears to represent BCV’s continued focus on logistics and supply chain. The investor has backed companies like Kiva Systems (a robotics firm that sold to Amazon). FourKites (supply chain visibility – raised $30 million in August); ShipBob (cloud fulfillment for e-commerce brands); TruckSmarter (a mobile app to help truckers find and book their next shipment) and now Cofactr. Additionally, last year it invested in Flux, which operates in the same space.
Indeed, the pandemic has exposed many cracks, particularly in the supply chain. For example, Ford has warned investors that it will incur an additional $1 billion in expenses in Q3 of this year, largely due to supply chain challenges, and GM has reported a 40% drop in profits in Q2 of this year. It’s not pretty out there, but it’s fertile ground for supply chain startups to sow their luck.
“Electronic parts were especially hard to find. This means many challenges for hardware companies that are building dishwashers, robots or smart speakers. In a few industries, we think there is an opportunity to create a vertically integrated software and logistics solution,” explains Agarwal. A good example of this is ShipBob and what they’ve built for mid-market e-commerce brands. Cofactor does this for electronics procurement and is a complete software and logistics solution for hardware manufacturers.
Cofactr’s ultimate goal is hardware is not too difficult, the founders shake.
“Startups attacking the hardware engineering space are starting to become real grassroots, but we all need to connect with each other and work together like we do with software development tools. You’ll see more collaboration between Cofactor, other startups, and well-established organizations that serve hardware,” Gulley says. “Fast forward a few years.” And we see Cofactor as a cloud solution for pre-production infrastructure. Our view feels something like a hardware manufacturing version of AWS; On-demand, cloud-based solutions for physical manufacturing. Today, companies can take a software product from MVP to massive scale without disrupting infrastructure investments. In ten years, the same thing will happen to building hardware products, and we believe Cofactr will be a key driver of that change.
All of this makes a lot of sense as the US seeks to build more reliable and robust offshore manufacturing capabilities. CHIPS action is making some real waves in the semiconductor industry, and the past year has seen a fair amount of investment in logistics and electronics manufacturing. Last month, Mackersit raised $18 million and Altana raised $100 million.
