Impact Analytics announced Tuesday it has raised $40 million in growth funding. The Linthicum Heights, Md.-based company and promotions planning partner to Dick’s Sporting Goods, founded in 2015, uses AI to help forecast demand, optimize pricing and plan inventory for future seasons for retailers, including those in fashion.
Sageview Capital led the round, with support from the startup’s long-time partner Vistara Growth.
As part of the deal, Impact Analytics will also add two new names to its board of directors. Jeff Klemens, a partner at Sageview Capital, and Prashanth Palakurthi, senior advisor at Sageview Capital, will join the team.
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Prashant Agarwal, Impact Analytics’ CEO and founder, said he looks forward to welcoming Klemens and Palakurthi, the former CEO of Reflexis Systems, which was acquired by Zebra Technologies in 2020.
“We’re excited that they’ve seen that potential in us to transform merchandise and supply chain retail and CPG, just like Reflexis did in labor management,” Agarwal told Sourcing Journal. “They both bring a wealth of experience and knowledge.”
Sageview Capital sees the financial and personnel investment as a step forward in the constantly changing retail industry, Klemens noted.
“Sageview Capital partners with proven companies that leverage disruptive technologies and that have an intimate understanding of their customers’ business challenges and objectives,” he said in a release. “Impact Analytics clearly excels in all these regards as a pioneer in their space and we look forward to a fruitful and exciting partnership.”
In addition to the firm’s support, Palakurthi has plans to personally invest in the company, Agarwal said.
Impact Analytics said it will use the new funding in four key areas: expanding its sales, marketing and customer service organizations in the U.S. and internationally; honing the platform and its AI capabilities; deepening strategic partnerships; and strengthening its balance sheet.
Part of the expansion, Agarwal said, will be focused on adding new geographies and bolstering existing ones.
“We’ll be strengthening our office in Europe, and in the next six months, we’ll be opening in Latin America and Southeast Asia, as well as Australia,” he said. “We have partnerships in Australia and Latin America right now, and we’re already in Asia because we are in India. We will be fully global with local presence over the next six months.”
Agarwal said Impact Analytics will add headcount on its technology and customer success teams. It will look to hire technology developers on the back end and front end, as well as customer implementation success managers to oversee customers in its new geographies. He said he did not know how many team members the company would hire in 2024.
Unlike other software-as-a-service providers in the forecasting space, Impact Analytics uses both historical patterns and recent variables to deliver its forecasts. Per the company, its fashion and apparel partners have, on average, seen a 30 percent increase in margins and a 20 percent decrease in lost sales because of the accurate, SKU-level forecasting it provides.
With clients including BJ’s Wholesale Club, fashion and apparel retailers use Impact Analytics’ AssortSmart tool for assortment decisions based on consumer and market datapoints; the PriceSmart tool for optimizing product pricing; the ForecastSmart tool for real-time inventory decisions; the PlanSmart tool for identifying changing trends and consumer demands; the SpaceSmart tool for developing floor plans for brick-and-mortar locations and the AttributeSmart tool for automated product tagging on their sites.
The new funding comes on the back of an undisclosed round with Vistara in June of 2023, as well as two sets of funding—one worth $11 million in February 2021, and another worth $10 million in October 2022—from Argentum Capital Partners.
Agarwal said the business has grown steadily year over year—and he anticipates even stronger growth in 2024.
“We are, in general, doubling each year. We know that we will double this year, but we want to accelerate that curve, and [find out], can we even triple this year?” Agarwal said. “We haven’t set anything in stone yet.”
He said, as AI continues to pique retailers’ interest, he expects to see greater AI adoption in the next several years.
“If you look at some of the tools and processes that we use, some of the leading software for our industries—be it retail, be it CPG—was actually done in the 90s,” he said. “There’s a chance for us to leapfrog for our clients. The analogy I use is, if you look at some of the non-Western world, they actually moved from rotary phones to cellphones. There wasn’t anything between. I think the same thing is happening now for a lot of our retail and CPG clients.”
