EQT Growth’s investment in IntegrityNext: Making supply chains more transparent and compliant
Last week, we announced that EQT Growth has invested EUR 100 million in IntegrityNext, making EQT Growth the company’s first institutional investor. Get the behind the scenes on how IntegrityNext has grown into one of the leading sustainability software solutions in Europe while being entirely bootstrapped, and learn what’s next for the Munich-based firm, in this article.
At EQT, one of our key convictions is that sustainability will become increasingly engrained in how businesses operate and within consumer preferences.
In recent years, EQT’s Private Capital team and EQT Growth specifically have done a lot of work in mapping out key market, regulatory and competitive trends within sustainability software, including identifying the most attractive sub-segments. Supply chain sustainability assessment was identified early on as one of the most attractive segments given clear network effects embedded in any software solution; the more suppliers that are rated, the faster time-to-complete for new prospective customers, the better the value proposition for customers.
Having spoken with hundreds of corporates, multiple industry and regulatory experts and many of the key software providers in the industry, we identified IntegrityNext as one of the clear emerging leaders to back. That’s why we are thrilled to announce €100m investment and partnership with the company. This represents EQT Growth’s first investment in climate tech, one of four prioritized sectors in the fund.
Empowering business to improve supply chain sustainability
We know first-hand the time and effort that companies invest into assessing risk and ensuring compliance across the value chain. Almost every business today — large or small — needs to think about sustainability and compliance with ESG-related topics. Research even shows that the number of Chief Sustainability Officers globally is growing at threefold year-on-year. As a result, solutions that help enterprises meet their commitments are more in demand than ever.
Enter the team at IntegrityNext. The company’s cloud-based software platform empowers businesses to meet regulatory sustainability requirements, manage ESG risks and improve supply chain sustainability. Founded in 2016, long before many others in the market saw the opportunity, the solution is now used by more than 200 customers, including Siemens Gamesa, Infineon, SwissRe, Kion and Hilti. To date, the company monitors almost one million suppliers in more than 190 countries.
Without software like IntegrityNext, an extremely heavy lift is needed for companies that want to deliver timely and comprehensive reports on sustainability issues, making it difficult for enterprises to rapidly assess a large portion of their supply chain. IntegrityNext’s solution provides a streamlined and automated way for enterprises to overcome these challenges. It allows customers to quickly and easily scan and risk assess their entire supplier base, compose specific supplier questionnaire assessments, produce automated compliance reports for certain standards, and track key insights via a dashboard. And it does all this while ensuring as smooth as possible a process for suppliers.
Meeting regulatory and stakeholder pressure
The IntegrityNext team has positioned itself at the cusp of a huge wave of incoming regulatory frameworks
The IntegrityNext team has positioned itself at the cusp of a huge wave of incoming regulatory frameworks across individual countries and Europe more broadly. Examples including Germany’s German Supply Chain Due Diligence Act (“LkSG”), the EU’s Green Deal and the Corporate Sustainability Reporting Directive (“CSRD”), mean that businesses find themselves in front of a large but overdue effort to map, risk-assess, and scrutinize the sustainability of their supply chain. This, combined with pressure from a broad base of stakeholders, is leading to ESG compliance and risk assessment becoming a “license to operate” issue.
As a result, the penetrated market in Europe for sustainability supply chain software solutions is expected to see strong growth over the coming years. According to market estimates, it is currently growing by more than 50 percent annually1, with an addressable market size of around EUR two billion(1,2).
Looking ahead
EQT Growth is delighted to be partnering with the IntegrityNext team. Co-founders Martin Berr-Sorokin, Simon Jaehnig and Nick Heine have shown tenacity and foresight in building IntegrityNext into the company it is today and it is clear we share the same passion and vision.
We look forward to building on this success together and accelerating the company’s growth, leveraging our in-house sustainability and digital knowledge, as well as our software sector value-creation playbook, to better enable businesses and regulators to promote sustainable supply chain practices through visibility and proactiveness. In addition to building out operational excellence, we will work with IntegrityNext as it looks to further cement its leading position within Germany, while expanding its core product to serve upcoming European regulations.
We are excited to back their growth journey across Europe and beyond — follow EQT Growth on LinkedIn and Twitter if you want to join too.
1Source: EQT Growth, Internal Market Sizing
2Source: PWC Market-Report
