Articles > Venzee Is A SaaS Value Play Investors Need To Be Watching

Venzee Is A SaaS Value Play Investors Need To Be Watching
April 12, 2018

When evaluating tech investments there are several key indicators that investors should be looking for while conducting their due diligence. Finding a product with a large addressable market, is disruptive in nature, and is increasing its recurring revenue through aggressively scaling user adoption are all characteristics of a tech investment that could be a winner down the road.

When we were first introduced to Venzee (TSXV:VENZ), we were pleasantly surprised to find that it had checked the box on all three of these key indicators. Venzee is a middleware solution that has set out to disrupt the retail industry (massive addressable market) by streamlining product information flow (think turbocharging big data). It significantly increases margins for both the supplier and retailers by eliminating manual labor and inherent human error while increasing data transformation speed and data quality. In a rapidly evolving sector such as retail companies are constantly in search of ways to expand their already razor thin margins and Venzee solves that pain point beautifully.

Venzee At A Glance

Venzee provides high value customized SaaS (software-as-a-service) solutions to mid-market and tier-1 enterprise clients around the world. Additionally, it accommodates the budgets of up and coming retailers hosted on platforms like Shopify. Venzee's platform transforms product information from suppliers and manufacturers into the requirements of retailers, a labor intensive and costly process that the retail industry still performs using spreadsheets.

Highlights

  • Venzee provides high value customized SaaS (software-as-a-service) solutions to mid-market and tier-1 enterprise clients around the world. Additionally, it accommodates the budgets of up and coming retailers hosted on platforms like Shopify.
  • According to Statista, in 2016, the global e-commerce industry achieved estimated US$1.8 trillion dollars in sales and is expected to grow to US$4.5 trillion by 2021. As e-commerce sales continue to grow at staggering rates, the need for better delivery of product information for businesses is now solved with the Venzee software solution.
  • Venzee provides high value customized SaaS (software-as-a-service) solutions to mid-market and tier-1 enterprise clients around the world. Additionally, it accommodates the budgets of up and coming retailers hosted on platforms like Shopify, with pricing starting from US$79 per month for limited features, while premium monthly packages start at $249/month and scale even higher for customized enterprise solutions.

Platform Continues to Gain Traction with Online Retailers

In March, Venzee Technologies said that the Interior Design agency, Avondale Decor selected the company to automate the process of adding and updating products to online retailers. This was a significant development as Venzee continues to gain traction and add to the list of enterprise customers utilizing the software.

Avondale Decor’s use of Venzee’s software allows the company to sell its products through a number of major brick and mortar stores as well as various online retailers.

Earlier last month, Korbet Bleu, a home goods e-commerce retailer, selected Venzee to automate the process of adding and updating products to korbetbleu.com. Korbet Bleu updated products through Venzee’s software via their Shopify integration.

This came only a few weeks after a leading Canadian textile importer and distributor selected Venzee to deliver enriched, error-free product information to retailers. The Canadian distributor is currently building an international distributor network and chose Venzee to help concentrate on growing its business, creating a return on investment, and delivering rich, error-free data to its distribution network. Venzee transforms product information from suppliers and manufacturers into the requirements of retailers, a labor intensive and costly process that the retail industry still performs using spreadsheets.

The Network Effect

Perhaps the most attractive facet of the Venzee’s platform is its inherent ability to scale. When Venzee lands an enterprise channel partner, it has the ability to appeal to the company’s vast network of distributors who are then faced with a simple decision. They can continue with their antiquated systems of spreadsheets or streamline the process by implementing Venzee concurrently with their upstream channel partner. This simultaneously reduces costs and accelerates revenue automating key processes throughout the supply chain for both the supplier and the retailer.

There are millions of start-ups, mid-tier growing businesses, Fortune 500 companies and channel partners in North America alone that Venzee is targeting in which an estimated 90% still use manual labor and spreadsheets to update information. They currently have paying clients in all 4 of these categories and continue to see growing industry adoption, strong closing rate, increasing MRR and business model capable of increasing ARPU and very sticky customers.

Venzee announced they have have a agreement with channel partner in place already hat has over 9,000 suppliers and vendors. (it MUST be a major retailer).

Here is a basic financial model on the 1st major retailer partnership who have 9,500 suppliers based on various adoption rates and average monthly revenue of $199USD per month.

Financial Model

Adoption Rate

Customers

ARPU (USD)

Monthly Recurring

Annual Run (USD)

5%

475

$199

$94,525.00

$1,134,300.00

10%

950

$199

$189,050.00

$2,268,600.00

15%

1425

$199

$283,575.00

$3,402,900.00

20%

1900

$199

$378,100.00

$4,537,200.00

25%

2375

$199

$472,625.00

$5,671,500.00

In Q1 2018 the Company opened up over 20 similar channel partner opportunities, closing any of them puts Venzee in the drivers seat to rapidly increase subscriber acquisition.

Multiply those above numbers by two, three or even four times and you can see the explosive growth opportunity at hand.

Continues to Strengthen the Executive Team

When it comes to investments in this arena, it is important to look at the company’s management team as well as the recent changes to it. When it comes to Venzee, this technology firm has strong leadership and has recently made significant additions to the executive team.

Earlier this month, Venzee announced the addition of John Abrams and Peter Montross to its sales and partner development team. Both Abrams and Montross join Venzee from Shotfarm, a Chicago-based competitor to Venzee, to lead the enterprise sales and partnership growth.

Montross  comes on as the VP of Sales and brings over 28 years of experience in the retail industry. He has extensive sales experience and success with SaaS content exchange solutions, business intelligence products and Product Information Management (PIM) software products and services.

Abrams will assume the role of VP of Partner Development and brings more than two decades of experience building high-volume, consumer-relevant digital supply chains in regulated and globally distributed industries. He will lead partner engagement activities and work primarily with enterprise-level content management services which require reliable, high-volume, product syndication solutions for their clients in retail, distribution, and manufacturing.

A Stock to Watch

Venzee represents a high growth opportunity and this is a stock we are monitoring closely. The company continues to execute and increase the number of retailers it is working with. We are excited by this growth initiative and will keep an eye on how the platform continues to gain traction.

Following the recent decline, Venzee is a stock we are monitoring closely as management continues to deliver. With a $19M market cap, and approximately $5M in cash, the valuation is attractive at current levels and we see long-term upside.

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