Wed. Nov 30th, 2022

ACERTA CLOSES $10.4 MILLION CAD SERIES B TO HELP AUTOMAKERS LIKE NISSAN AND GM BUILD CAR PARTS MORE EFFICIENTLY

Over the past few years, the automotive industry has faced pandemic-fuelled supply chain disruptions, labour shortages, and rising raw materials costs.

Kitchener-Waterloo-based Acerta Analytics has benefitted as car and vehicle parts manufacturers have sought to operate more efficiently amid these conditions, amassing a list of clients that includes Nissan, General Motors (GM), BMW, Volvo, and Dana.

Acerta co-founder and CEO Greta Cutulenco said Acerta is ready to “really kick up the gears” and start scaling.

Acerta uses machine learning (ML), artificial intelligence (AI), and data analytics to improve manufacturing quality in the auto industry. The startup’s LinePulse software platform helps carmakers and vehicle parts suppliers detect defects in vehicle parts early, cut scrap and rework expenses, and avoid shipping defective components.

Armed with a roster of big-name auto industry clients and $10.4 million CAD ($8 million USD) in Series B funding, Acerta co-founder and CEO Greta Cutulenco said Acerta is ready to “really kick up the gears” and start scaling. The round, led by a pair of new investors in BDC Capital’s Industrial Innovation and Thrive Venture Funds, will enable Acerta to grow its presence in North America and Europe, where it hopes to expand both within its existing customer base and beyond.

In an interview with BetaKit, Cutulenco said Acerta plans to put the bulk of this capital towards Acerta’s go-to-market strategy. “We’re at the point right now where we’re finally taking our solution outside of any one or two single plants and we’re starting to deploy globally within some of [our] customers.”

Acerta’s all-equity, all-primary Series B round, which closed in late September, also saw participation from existing investors OMERS Ventures and StandUp Ventures. The fresh capital brings Acerta’s total funding to nearly $23 million CAD (around $17 million USD), from a group that also includes Microsoft’s M2 and EQT.

Cutulenco declined to disclose Acerta’s valuation but claimed the company’s latest financing came at a higher valuation than the startup’s 2020 Series A round.

Acerta was founded in 2017 by Cutulenco, a former safety engineer at auto parts manufacturer Magna, ex-CTO Jean-Christophe Petkovich, and University of Waterloo professor Sebastian Fischmeister.

RELATED: Kitchener AutoTech Acerta secures $5 million USD of new capital in OMERS-led Series A

Since its Series A round, the startup has expanded from a few to nearly 15 facilities across North America, Europe, and Japan. With the help of CTO Alan Tan, who joined Acerta in May 2021, much of the firm’s focus has been on ensuring its platform was ready to scale.

As Acerta looks to put its pedal to the metal, Cutulenco described Canada, the United States, and Mexico as Acerta’s “top targets” in the near-term, as automakers across the continent shift away from Asian suppliers and look to source more parts locally after navigating COVID-19 supply chain turmoil. Acerta is also already working with companies in France and Germany, as it sees room to grow in Europe beyond its existing customer base in the region.

Acerta works predominantly with Tier 1 manufacturers and original equipment manufacturers (OEMs) in automotive and off-highway industries, helping them produce axles, transmissions, and engines, as well as new sources like electric vehicle (EV) batteries, more efficiently.

Cutulenco said the startup has seen manufacturers “double down on cost-efficiency gains” and move away from focuses like autonomy and mobility during the pandemic. The CEO added that this shift has made the firm’s platform, which helps this group operate more cost-effectively, more attractive.

Moreover, amid rising fuel costs, automakers have begun investing more heavily in EVs, building up new production lines. Acerta sees a significant opportunity to capitalize on this shift towards electrification and is already helping customers build EV parts—which can be more complex than gas-powered car parts—more efficiently.

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Like its target customers and any other startup operating in this market environment, Acerta has taken a closer look at its spending to ensure it is operating as cost-effectively as possible. However, Cutulenco said that Acerta did not overhire, and hasn’t had to make layoffs this year as a result.

“We’re in a position to be pretty lean and scalable at this point,” said Cutulenco. The CEO noted that Acerta currently has around 35 employees. Though it plans to hire some more go-to-market boots on the ground in the regions it is targeting for expansion given that manufacturing remains a “very hands-on” industry,” the company likely won’t grow its headcount to more than 45 over the next year.

Heading into what could be a prolonged economic downturn, Cutulenco believes Acerta is well-positioned given how “critical” the company’s tech is to the operations of its customers.

“From our perspective, I believe we’ve equipped Acerta with the right tools and the right amount of capital that is needed for them to go through this economic climate, if you want to call it, for the next couple of years,” Aditya Aggarwal, partner at BDC Capital’s Industrial Innovation Venture Fund, told BetaKit in an interview.

Aggarwal, who is joining Acerta’s board as part of the round, identified Acerta’s growth over the past 18 months, amid auto supply chain disruptions, as a positive sign. In the meantime, Aggarwal believes Acerta’s existing relationships with large auto parts suppliers and major car manufacturers will prove useful from a runway perspective.

RELATED: With new Thrive platform, BDC commits half a billion dollars to invest in Canadian women-led startups and funds

“Having a strong customer base today definitely de-risks that for us in the future, but I’d say we’re going to continue making every decision possible to make sure that we’re resilient through the potential recession,” said Cutulenco.

Acerta marks the 14th investment to date by BDC Capital’s Industrial Innovation Venture Fund. Launched in 2019 and seeded with $250 million CAD, the BDC fund targets three strategic verticals: advanced manufacturing, AgTech and food tech, and innovation in extractive industries, including mining and oil and gas. After backing Acerta, Aggarwal said the Industrial Innovation Venture Fund is now close to halfway deployed.

According to Aggarwal, the Industrial Innovation Venture Fund was first introduced to Acerta by Thrive—the $300 million successor fund to BDC Capital’s Women in Technology Venture Fund. Thrive was unveiled by BDC in September as part of a broader, half-a-billion-dollar commitment towards supporting Canadian women-led startups and investment firms.

As Thrive managing partner Michelle Scarborough put it, “[Acerta’s] suite of SaaS solutions for precision manufacturing is already transforming the automotive and transportation industries and receiving strong market validation,” adding, “we know that there is a lot more to come.”

Feature image courtesy Acerta.

SOURCE https://betakit.com/acerta-closes-10-4-million-cad-series-b-to-help-automakers-like-nissan-and-gm-build-car-parts-more-efficiently/

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