If you want to open up a mac-and-cheese restaurant, you don’t just head over to the closest Whole Foods and pick up all your ingredients in one fell swoop. You find and vet suppliers of fresh produce, cheese, and pasta, and then plan your purchase, negotiate the price, buy the goods, and handle inventory.
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That workflow is a business opportunity that Scout RFP saw in the market. Started by the ex-founders of an online ordering system for restaurant chains, Scout RFP helps buyers manage purchases (and the workflow around them). This week Scout RFP was bought by Workday, a public Pleasanton, Calif.-based company that offers enterprise software for human resources and financial services.
Scout RFP, which raised $60.3 million in known venture capital funding, was scooped up by Workday for about $540 million, plus cash, according to a company blog post. It’s also worth noting that Workday was already a strategic investor in Scout RFP.
Here’s why we care: A public SaaS company just bought a private SaaS company to make sure logistical errors don’t deprive their customers of goods – er, mac and cheese. Jokes aside, Scout RFP was created to help all industries, not just restaurants, with goods management. (In fact, in August 2019, one of the founders was quoted in a Forbes story saying that Scout was working toward being a public company one day).
Through the acquisition, Scout RFP now has access to Workday customers like Amazon, Bank of America, Netflix, and Chiquita (yes, the banana brand). In return, Workday’s services expand into “sourcing and supplier engagement,” per Matt Murphy of Menlo Ventures, a previous investor in Scout RFP. Beyond just that, Scout RFP claims to help with “reduction in spend” and “greater policy compliance” according to a press release.
According to Workday’s earnings reports, it made a healthy $2.3 billion in subscription revenue in fiscal 2019. In its latest report, it said it is eyeing around $3.6 to $3.7 billion in fiscal 2020, almost a $1 billion bump.
Therefore the company buying Scout RFP, a startup that has the potential to add to that number and overall revenue growth, is not surprising; it has a big goal to meet.
So my call? Combining forces seemed within arms reach, good for the pocket, and ideal for the customers. The deal is expected to close before January 31, 2020.
Illustration: Li-Anne Dias