VirtualStock Holdings Limited

  • Cloud based SaaS business
  • 7% holding
  • Invested at value of £2m, latest investment at valuation of £70m
  • The business continues to gain new contracts and increase revenues.
  • Aim is to list, potentially on NASDAQ

Virtualstock utilises agile, open source technology to allow information to flow between fragmented systems in a unique way, without disruption to existing IT. Data is seamlessly collated, enriched, mapped and validated, allowing only trusted, reliable information to be deployed. Virtualstock’s solutions are a rapid, flexible and scalable alternative to traditional costly and time-consuming systems integrations. The “integration” market is worth US$300-500 billion per year.

By unlocking and connecting data scattered across disparate parts of the supply chain, Virtualstock’s cloud-based solution, The Edge, helps clients drive efficiency, growth and customer satisfaction, supported by an integrated and seamless digital supply chain. The healthcare equivalent, The Edge4Health™ helps fuel industry-wide efficiency and operational productivity for both Healthcare Providers and Suppliers.

Eight Peaks initially identified Virtualstock’s potential in 2012 when it invested in Virtualstock at a valuation of £2m. Since then, Virtualstock has transformed from a small company with revenue in the few hundred thousand pounds to a fast growing and leading company, targeting a doubling of revenue year on year, in the digital supply chain solution space. It has a growing client list that includes several of the top UK retailers, including Tesco, Aldi, Sainsbury’s Argos, Kingfisher, Dixons Carphone and John Lewis, and eleven NHS health trusts. Revenue is now measured in the millions of pounds. The most recent investment into Virtualstock was at a valuation of £70 million or 35x the initial valuation at which Eight Peaks invested.

Virtualstock’s potential was recognised by Notion Capital, a leading European B2B SaaS Venture Capital firm. In July 2017, Notion invested £4.5m in Virtualstock at a valuation of £66m to support the next phase of Virtualstock’s growth. Since then Virtualstock’s progress has continued.

In January 2018, Wincanton plc, the largest British logistics company, announced a new strategic partnership with Virtualstock. Virtualstock’s digital supply chain and marketplace solutions enable retailers to easily and cost-effectively expand their online product range without the need to carry additional stock. Virtualstock’s platform delivers integrated “Supplier to Consumer” (S2C) fulfilment functionality, allowing one retailer to sell another retailer or supplier’s goods without ever having to stock or deliver them, driving significant opportunities for revenue growth, while protecting margins by mitigating the impact on operating costs. When allied with Wincanton’s collaborative logistics capability, the two companies are able to rapidly transform a retailer’s ability to quickly respond to an ever-changing market.

In March 2018, Virtualstock partnered with Previse Ltd to deliver a seamless “purchase to pay” supply chain model with cash-on-delivery for suppliers. Previse is an Artificial Intelligence based instant supplier payment decision company. Together, Virtualstock and Pervise are able to deliver a fully integrated purchase to pay supply chain system with cash on delivery for suppliers in the UK.

In line with Eight Peaks’ historic transaction based valuation policy, Eight Peaks held its 7.2% stake in Virtualstock at the £66m valuation of July 2017, or £4.8m. This policy does not take any account of investee companies’ progress, nor of their further prospects, since the last transaction. Eight Peaks was the first outside investor into Virtualstock and remains the largest outside investor.

Post the year end, Virtualstock raised an additional £3.4m at the same price as the Notion round, valuing Virtualstock at approximately £70m and Eight Peaks’ resultant stake of 6.8% at £4.8m. Also post the year end, Virtualstock appointed Rene Shuster as Chairman. Rene’s experience and expertise covers all stages of development of businesses from private equity, through to IPOs to post IPO growth and has been earned with companies whose combined valuation is measured in US$ billions. This will be invaluable to Virtualstock in accelerating its progress and expansion internationally.

Indicators of Virtualstock’s outlook and potential include the fact that shortly after the investment by Notion, Virtualstock’s CEO stated that Virtualstock intended to list, possibly on the NASDAQ. Valuations in this sector are high, for example, Mulesoft, a West Coast based company that operates in the integration space was purchased in March 2018 by Saleforce.com for US$6.5bn.partnered with the UK’s leading logistics company Wincanton plc.

Since Eight Peaks’ investment into VirtualStock, Eight Peaks has assisted VirtualStock to have its solution become adopted by some of the largest private and public sector organisations. VirtualStock is well on its way to becoming an industry standard inventory, supply and logistics value chain and data management utility.

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