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Privately Funded Open Source Business Models

Still unsure of open source? Take a look at these investment cases of open source businesses and DPGs that have been privately funded.

Other DPG Investment Resources found in this folder:

1. Examples of Open Source Business Models (OBSM) & Investment Cases of funded OSBMs

2. DPG Engagement Strategy With Investors

3. DPG Investment Case & Other Fundraising Tools

4. Investor Checklist Used to Evaluate Companies

5. What does the Private Capital Funding Framework look like?

Business Model: StaTwig​

StaTwig prevents supply chain failures by tracking details to a blockchain that connects all the stakeholders in the value chain.

About StaTwigDescription
AboutA blockchain powered supply chain management platform that can track products at unit level in multi-stakeholder environment
PresenceHyderabad, India (HQ), Australia, USA
IndustryFood and Agriculture, Pharma
Employees~20
Business model- Software as a Service & Revenue from service fees
FocusProduct quality and safety
SDG alignmentSDG Goal #3 Good Health and Well Being
Private funding history2017: Accelerator, €20.000 (Airmaker), 2018: Accelerator,€20.000 (Startupbootcamp and Hartford InsurTech Hub), 2019: Accelerator, €90.000 (T-Hub(1)), 2021: A group of angel investors, micro-venture capital firms and family offices, $500.000 equity investment
Public funding2018: Accelerator, €90.000 (UNICEF), 2019: Grant, €90.000 (CIIE(2)), 2019: Incubator, €90.000 (CIIE(2))

Mission​

To make global supply chains resilient and sustainable by connecting data silos, and thereby reducing wastage

Description​

StaTwig develops a platform that connects all stakeholders in the value chain. It provides real-time tracking and visibility of the life journey of a product, including geographical location, changes in temperature, along with all transactions, contracts and payments associated with the product as it moves through the supply chain, enabling clients to trace products from manufacturer to customer by using loT devices that tag along with the product.

Products: VaccineLedger (vaccine supply chain), FoodLedger, Brewcollect (AB Inbev), Cargoledger (air cargo terminals), Sensostat (Internet of Things data capture)

  • Key challenge solving for: The information systems used by various stakeholders do not talk to each other leading to supply chain failures such as counterfeiting, diversion, black marketing, cold-chain failures and stock outs
  • Advantage of open-source technology: StaTwig focuses on the (international) development sector in which clients (UN, governments) value companies that are open source. Additionally, in the future a community of developers can be engaged to accelerate the development and adoption of the software.
  • Level of open-source technology in business model: 100%
  • Status: generating revenue (2021 is 1st year of sales after VaccineLedger was tested and LTA signed with UNICEF in Sep 2020)

Business Model Canvas​

Activities

  • Development of VaccineLedger, focused on vaccine supply chains, with unique digital IDs for every vaccine and unit level track and trace
  • Development of FoodLedger, Brewcollect (AB Inbev), Cargoledger (aircargo terminals), Sensostat (Internet of Things data capture)

Customers

  • All stakeholders in the supply chain can be a paying customer (suppliers, original equipment manufacturers, distributors and retail clients)
  • Currently, StaTwig focuses on the vaccination vertical, and within that on donors of large vaccination distribution programs (e.g. UNICEF) or producers of vaccines (e.g. AstraZeneca)

Value provided

  • The FoodLedger combats hunger and saves money by tracking and reducing wastage of rice bags from farmers to beneficiaries in the Telangana state government subsidized food grain program
  • For donors, the VaccineLedger reduces wastage and improves the efficiency of large vaccination distribution programs by creating better visibility and traceability of money spend and by preventing cold chain failures and stock outs
  • For suppliers, the VaccineLedger leads to higher compliance rates on transparency regulation and to reduced risk of counterfeits and black-marketing

Resources

  • Blockchain technology that distributes and decentralizes the data
  • Team of supply chain specialists and tech developers

Customer Relations

  • User apps
  • User websites

Channels

  • Works with technological and logistical channel partners such as: Apollo logisolutions, IDB, Tech mahindra, MAERSK, GAAR
  • Works with vendors to offer a range of Internet of Things devices to measure product location and conditions throughout the value chain

Partners

  • Internet of Things vendor partners
  • Technological / supply chain channel partners
  • Funding partners, like IFC, development banks, international donor organizations (e.g. UNICEF)

Cost

  • Personnel costs: development team mainly, a bit of sales and marketing
  • Procurement costs: Internet of Things decives from 3rd party suppliers / vendors

Revenue

  • Average revenue of 0.1 USD for each stock-keeping unit (e.g. vaccine) tracked
  • Clients pay for Blockchain information that they extract out of the system at each stage, so they subscribe to touchpoints along the product’s journey (e.g. airport, warehouse, etc.)
  • Revenue from consulting services, namely offering of virtual tech modules (e.g. visualization, analytics, to predict & prevent)

Comments & Insights​

  • UNICEF could focus more on the development of strong business models when incubating start-ups; in the end, venture capital firms focus on revenue growth and profit when making investment decisions. Companies that are “shy” to generate revenue will not develop sustainable business models
  • UNICEF can provide additional value to their fund graduates by marketing them as impactful and scalable investment opportunities. Showcasing commercial successes of its fund graduates could spark interest of investors
  • In the investor pitch, it is not necessary to mention that the business is based on open source technology. Market fit and growth are more relevant. Potential responses to venture capitalists that are hesitant to invest in open source could be:
    • “We already work (exclusively) with very large clients like UNICEF that value open source”
    • “We can scale and develop our product more rapidly when we engage a community of developers (like university students)”
    • “Large governments and/ or international donor organizations have a large mandate for open source”

Investment Case: StaTwig​

StaTwig has attained a $750k total contract value in 2021 and expects it to grow to $1,2 mln by the end of 2021, and has recently raised $500k of equity investment. Currently, StaTwig is raising capital from strategic channel partners. Next funding phase will be larger round of series A venture capital.

Company snapshot - StaTwig​

Market Size​

  • The TAM for life sciences supply chain and food and beverage track and trace tools in StaTwig’s countries of operation(2) amounts to bln
  • The SAM for StaTwig’s VaccineLedger, FoodLedger, Brew-collect and Cargoledger is 50 mln
  • The SOM is 75 mln

Traction​

  • With VaccineLedger, StaTwig is active in India, Kazakhstan, Ethiopia, Kenya, Mozambique, Morocco and Bosnia and Herzegovina
  • Clients include vaccine and pharma-ceutical clients (UNICEF, AstraZeneca, Gavi, IDB, Government of Telangana and Government of Maharashtra), a food & beverage company (AB InBev) and a Cargo terminal (GAAR)
  • StaTwig works with technological and logistical channel partners such as Apollo LogiSolutions, IDB, Tech Mahindra, Maersk and GAAR
  • The Total Contract Value (TCV) in 2021 amounts to 50k so far, with potential to scale TCV to USD ,2 mln by the end of the year

Milestones​

  • 2021: A group of angel investors, micro-venture capital firms and family offices took a 00k stake in the company.
  • 2020: Signed an LTA with UNICEF for 3 years which facilitates and speeds up the deployment of StaTwig’s solution in 120 UNICEF operated countries. UNICEF’s criterium for LTA is for the software to be open source.
  • '19-'20: Conducted a pilot in two countries with UNICEF; support from Gavi.
  • 2019: Funded by UNICEF for product development.
  • Prior: StaTwig has been part of several accelerator and incubator programs without equity dilution (i.e., free or grant-based).

Investment Opportunity - StaTwig​

Competitive advantage​

  • Disruptive technology: StaTwig developed the first blockchain powered supply chain management platform that can track products at unit level with the Internet of Things device
  • Time to market: StaTwig is the first to provide supply chain visibility and transparency at each stage of a product using blockchain technology
  • Network effects: the more stakeholders in the supply chain use the StaTwig app to monitor goods as they move through the supply chain, the better goods can be tracked and the more value the platform creates
  • Stickiness: StaTwig has a commercial relationship advantage because of the signed Long-term Agreement (LTA) with UNICEF

Growth Ambition​

The total contract value is projected to grow with +411% CAGR over the next 2 years to an annual value of $17 bln in 2023, of which a large share of the revenue comes from procurers and donors like UNICEF. The LTA with UNICEF (with a term of 3 years) is the driving force behind this growth.

Further Needs​

StaTwig needs funding from investors (larger round of series A VC) to expand its capabilities and functionalities:

  • Capabilities: StaTwig is looking to further develop its state-of-the-art analytics capability to be able to meet client demands. This includes adding skilled experts to the team such as a chief growth officer Life Sciences, a sales Engineering Team Life Sciences, and a chief Technology Officer
  • Functionalities: StaTwig is expanding its activities to be able to offer predictive analytics, supplier payments, returns and recalls, NFT marketplace, deployment support, and 3rd party supply chain apps