The German data processing company Celonis has cemented its position as one of Europe’s most successful software start-ups, after closing a third round of funding that values the company at €2.5bn.
The eight-year-old business, which uses artificial intelligence to streamline complex procedures such as supply-chain management and customer service, has big corporate clients including Uber, L’Oréal, General Electric and Airbus and counts Al Gore, the environmentalist and former US vice-president, among its fans.
The latest round of investment, in which Celonis raised €290m, catapults the tech pioneer into an elite group of German unicorns, putting it at third place behind used-car marketplace Auto1 Group and fintech pioneer N26.
Celonis’s increased valuation comes after Germany leapfrogged France as a destination for venture capital. German start-ups attracted almost $2bn in funding during the third quarter of 2019, according to CB Insights, and the country was alone among those analysed in seeing growth in quarterly deal activity.
“We started with €12,500 in our combined bank accounts, the minimum that’s needed to start a company in Germany,” said Alexander Rinke, Celonis’s co-chief executive, who founded the company with fellow students Martin Klenk and Bastian Nominacher in Munich.
Now, he said, clients were knocking at Celonis’s door as they “recognise the need for process mining software, not just a whiteboard or poster-driven approach”.
Celonis’s technology allows big companies to avoid replacing expensive legacy software, on which they may have spent billions of dollars, and instead rely on optimising products from the likes of SAP and Salesforce.
Lufthansa, which relied on what Mr Rinke called “a ground operation system that has been around for a while”, managed to increase on-time flights for 8m passengers using Celonis, the company claimed.
Mr Rinke would not be drawn on whether the company, which now employs almost 800 people and is based in Munich and New York, plans to pursue a stock market flotation in the near future.
However, he did stress that he was “very bullish” on the future of Celonis, which is registering triple-digit growth and has maintained a positive cash flow ever since being founded in 2011.
Feroz Dewan of Arena Holdings, which led the latest funding round, said Celonis was “the clear market leader in a category with open-ended potential”.
The company’s continued expansion is a boost for Bavaria, which has attracted the praise of Apple chief executive Tim Cook, who said he “couldn’t imagine a better place” than Munich, in which to base a design centre.
Mr Rinke said he hoped Celonis’s success would lead to more unicorns emerging from the city, and in particular from his former university, the Technical University of Munich. “Germany has a great heritage of entrepreneurship,” he said, but added that the problem was that most of the companies that embodied that heritage “are between 130 and 170 years old”.
To reverse that trend, he said, the country’s often conservative culture needed to evolve.
“If you want a start-up ecosystem,” said Mr Rinke, “you have got to accept failure.”