q&a

With fresh funds, this Houston entrepreneur plans to scale his industrial e-commerce startup

Tim Neal, CEO of Houston-based GoExpedi, shares how his company plans to scale following its recent series C closing. Photo by Colt Melrose for GoExpedi

Consumers are getting more and more used to picking up their laptops or phones and ordering everyday items in just a few clicks or taps — and seeing those items delivered in just a few days. To Tim Neal, CEO of Houston-based GoExpedi, ordering parts and tools for industrial businesses should be just as easy.

GoExpedi, which just closed a $25 million series C round, has seen rising demand for its e-commerce platform focused on industrial orders, and Neal credits this demand on a change in mindset within the industrial sector. Additionally, he says he's seen clients more and more focused on cutting costs.

Neal shared his company's plans for growth and scale, as well as how fundraising during a pandemic went, in an interview with InnovationMap.

InnovationMap: What’s the challenge GoExpedi was founded to change and what’s the game changing element the company provides the industry?

Tim Neal: We really focus on the industrial MRO space. The mission for us is to make procurement of these goods simple and efficient. That means taking out the human process and the back and forth. It's not too dissimilar to how, if I order from Amazon, I have an expectation when that order arrives. The industry has not historically had that. So, we wanted to take a tech-first approach, really make sure people getting these things, but then also track what they're spending to help them more effectively run their business.

IM: What were the early days like?

TN: We're a bootstrap business. We had a drive our pick up trucks 3,000 miles a week, not taking salaries. There was a uphill battle for sure in the beginning because it was a psychological shift. Again, if you look at Amazon going in the bookseller market, people were used to going in a store and getting books. It's similar. People are used to picking up the phone and getting an order done. So we had to really go through an evolutionary process of educating the user on what is the technology and how the technology is actually make their life easier.

IM: What do you attribute GoExpedi's growth to?

TN: I really think it's the change in psychology. And a lot of it is timing too. The labor pool in the oil and gas space in particular — 50 percent of it turn it over. Now you're no longer having these tradesmen who are 60-plus years old and walking encyclopedias. You have a younger workforce that's used to buying on eCommerce and their daily life. So, it's helping them by technical parts in a not technical way. We just had a pool of clients who were more tech native and who had more familiarity with transacting online.

IM: You recently closed a Series C round — what was it like fundraising during a global pandemic following the fall in oil prices?

TN: It's a little weird, cause I'm used to doing road shows — spending four days in San Francisco or New York meeting a bunch of people, rather than sitting in my office on Zoom. So it was a little weird, in that sense that you didn't shake people's hands.

We were in a fortunate position — it's kind of counterintuitive — but we really decoupled from the COVID-energy side where you've got a double whammy, especially in Houston. COVID put people on a remote basis, and then you've got negative oil for the first time ever. But what that did is it really presented this psychological shift in our end user. Companies reduced their traffic 30-plus percent and had to lay off people. They're focusing on cost saving and how do you grab a hold of your business, especially in this work from home environment. And that really resonates with our value proposition. With that, we were able to get a lot of demand of people wanting to have live analytics at their house and see what the net assets are spending. And then we'd be able to get manager reports on benchmark expenditure. We saw a big push in the market there.

IM: How are you enhancing and expanding your technology or team with the funds?

TN: We're seeing massive amount of market demand — folks really being able to fully capture that and start hiring more talent. But, the big focus for us is twofold. One is on our technologies. We have a tool center that really helps bridge the operational transactions at the field level and the management kind of reporting workflows, so really working on our technology, increasing our machine learning and our AI usage, and building out that team. But then on the supply chain side, because we're getting more demand, we want to focus on increasing the efficiency with adding robotics to make sure we can get even more packages out quicker to the market.

IM: Do you plan on expanding into other industries or markets?

TN: We've gotten a ton of demand, and we've been serving some markets to due to demand. We just hired a strategy team and we're making a really concentrated effort to — probably in Q1 — go after some other adjacent industrial markets, because we have a very similar dynamic that buying in terms of corporate structures, demand drivers and value proposition. That's a big focus for us.

IM: Do you already have plans for another round?

TN: We're still very well capitalized now. We weren't out of money, and we still had a large amount of cash from the last round, so this was more an opportunistic approach because we were seeing good market demand that we raised right now to further capture that. I wouldn't be surprised if, in the next 18 to 24 months, we raise again.

IM: What has it meant for y’all to be based in Houston?

TN: I'm from New Jersey, and I always kind of had a different view of Houston until I actually moved here. But, Houston is going to be the third biggest city. It's got a massive labor pool, great universities, and it should be a great breeding ground for talent. The other thing is that, since we started in 2017, I'm seeing a big shift in Houston as a whole, especially from an innovation standpoint — you have Station Houston, The Cannon, and others. You see more entrepreneurial spirit than you've seen in San Francisco and others.

I think the biggest shift that I've seen even the last three years, and especially now with COVID, is where people coming out of college in Houston want to work. I went to Oregon for college — all my friends are in San Francisco pretty much. When we got out of college, I saw people wanting to work for a startup. But in Houston, it was, "I want to work for Oxy or Shell — a big corporate." But that's shifting. We're getting a lot of younger talent that want to work in a startup. They now see that startups work in Houston and that it's a good career path.

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This conversation has been edited for brevity and clarity.

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Originally expected to raise $150 million, Mercury's latest fund is the largest raised to date. Photo via mercuryfund.com

A Houston venture capital firm has announce big news of its latest fund.

Mercury Fund, founded in 2005 to invest in startups not based in major tech hubs on either coast, closed its latest fund, Mercury Fund V, at an oversubscribed amount of $160 million. Originally expected to raise $150 million, Fund V is the largest fund Mercury has raised to date.

“We are pleased by the substantial support we received for Fund V from both new and existing investors and thank them for placing their confidence in Mercury,” Blair Garrou, co-founder and managing director of Mercury Fund, says in a news release. “Their support is testament to the strength of our team, proven investment strategy, and the compelling opportunities for innovation that exist in cities across America.”

The fund's limited partners include new and existing investors, including endowments at universities, foundations, and family offices. Mercury reports that several of these LPs are based in the central region of the United States where Mercury invests. California law firm Gunderson Dettmer was the fund formation counsel for Mercury.

Fresh closed, Fund V has already made investments in several companies, including:

  • Houston-based RepeatMD, a patient engagement and fintech platform for medical professionals with non-insurance reimbursed services and products
  • Houston and Cheyenne Wyoming-based financial infrastructure tech platform Brassica, which raised its $8 million seed round in April
  • Polco, a Madison, Wisconsin-based polling platform for local governments, school districts, law enforcement, and state agencies
  • Chicago-based MSPbots, a AI-powered process automation platform for small and mid-sized managed service providers

Mercury's investment model is described as "operationally-focused," and the firm works to provide its portfolio companies with the resources needed to grow rapidly and sustainably. Since 2013, the fund has contributed to creating more than $9 billion of enterprise value across its portfolio of over 50 companies.

“Over the past few years there has been a tremendous migration of talent, wealth and know-how to non-coastal venture markets and this surge of economic activity has further accelerated the creation of extraordinary new companies and technology," says Garrou. "As the first venture capital firm to have recognized the attractiveness of these incredible regions a dozen years ago, we are excited to continue sourcing new opportunities to back founders and help these cities continue to grow and thrive.”

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