Can Operations Research Companies Raise Investment?
The short answer is a conditional yes.
Even though OR is a very large domain with a plethora of creative applications, its commercial prospects are most visible in supply chain. In other industries, it is either part of a much larger software suite or models are built by consultants for specific purposes.
I failed to find any generalized OR startup getting investment (save perhaps a significant recapitalization of Gurobi by Thompson Street Capital Partners).
It doesn’t mean that OR-based startups are not investable. They might be cash positive enough to pay the bills and enjoy a steady growth (which is a perfectly fine path as well).
Here I list three startups with OR as a central piece of their value offering. Needless to say, they offer more than just optimization. Many of them add predictive capabilities (AI) and in full software suites.
First coincidentally, then incidentally all three startups covered in this post can be found in Sapphire Ventures’ “Trends in Supply Chain” post.
p.s. I wrote most of this post before two major earthquakes hit Turkey in Feb 6, 2023. Large swathes of southeastern Turkey and northern Syria are affected with significant losses. International society was quick and generous to respond (you can still donate at Turkish Red Crescent, AHBAP or any other organization you think as suitable). It also made me think about “disaster relief supply chain”. It has a rich literature (there are many examples like this, this and this) but I’m not aware of any companies/organizations with large scale applications. I suppose it such knowledge put in practice would have made a difference and it may still make a difference.
NextMV
Founded in July 2019, Nextmv.io is an optimization infrastructure for logistics companies. They aim to streamline the data-model-result operations with an embedded “solver as a service”. Their tagline on YC page is “Dev platform for quickly building and testing logistics algorithms”.
Nextmv is a typical startup in terms of early funding rounds. They graduated from Y Combinator (Winter 2020). They had three rounds and USD 11.4M invesment under their belt until recently. Valuation or details of the deals are not shared. See details at Crunchbase but here are some highlights.
- They attended Y Combinator program and graduated with seed invetment. (USD 640K) (Nov ‘19)
- They got seed funding within about six months (USD 2.7M) (May ‘20). See details from their own post. The first sentence of their post is “The discipline of ‘operations research’ (or ‘decision science’) is relatively unknown in the startup and tech world.”
- They closed Series A funding within 7 months(USD 8M) (Dec’20). See details from their own post and Techcrunch post.
Optimal Dynamics
Optimal Dynamics (OD) is also an optimization company focused on logistics problems. Even though their product and services make them a full suite, heart of their product, Core AI is an optimization algorithm: “CORE.ai uses a powerful algorithmic strategy called high-dimensional approximate dynamic programming.”.
OD has seen 5 rounds of investment according to Crunchbase.
- July 2017, pre-seed (USD 450K)
- April 2020, pre-seed (undisclosed)
- July 2020, seed (USD 3.9M)
- May 2021, Series A (USD 18.4M)
- April 2022, Series B (USD 33M)
According to Dealroom.co, company’s current (April 2022) valuation is in the range of USD 132–198M. It is notable that getting significant investments in the recession period which many VCs prefer to keep dry powder “dry” is significant.
Solvo.ai
Solvo is a newly minted Supply Chain AI company. The company has a seed investment of USD 4M from high caliber investors including Sequoia Capital (not leading).
They are promoting “Human expertise + AI” as a solution to supply chain decision making processes, starting with pricing.
Epilogue
OR startups attracting investment are scarce but not unseen. If you have more examples, I would love to list them as well. Perhaps as an addition to this post, perhaps in another post.
Updates
April 6, 2023
- Timefold raised EUR 2M seed from Smartfin VC. Read the full story from the co-founder and CEO Maarten Vandenbroucke. Timefold is built on Optaplanner solver created by Geoffrey De Smet, who is also now CTO of Timefold.
March 2, 2023
- Meinolf Sellmann’s reached out to say “ We are building a novel optimization solver (also for non-linear, non-convex, non-differentiable, non-continuous, multi-objective and stochastic problems). We are pre-launch right now, but do consulting. The first version will likely go public in April.” and they are funded privately. Congratulations and good luck! Let’s see what InsideOpt has to offer!
- Prof. Warren Powell from Optimal Dynamics (also emeritus faculty from Princeton University) featured this post in his own Linkedin post. Thanks a lot for his opinions.
