Celonis GmbH, a New York- and Germany-based startup that helps large enterprises find ways of making their operations more efficient, has closed a mammoth $1 billion funding round at an $11 billion valuation.

The round was jointly led by Durable Capital Partners and T. Rowe Price Associates, the startup said in its funding announcement today.

Celonis provides a so-called process mining platform that helps companies find inefficiencies in their operations. The platform can detect, for example, if a retailer buys more of a given product that it can sell, or if a factory produces a certain item at a lower volume than a company’s other plants. Celonis spots such issues by looking through the invoices, sales logs and other business records that a firm generates as part of day-to-day operations.

The startup claims to have saved tens of millions of dollars for some clients. Moreover, Celonis says that its platform lends itself to additional use cases besides reducing costs. Online retailers, for example, can use the platform to find inefficiencies in their delivery networks to reduce the amount of time it takes parcels to reach customers.

Alongside features for detecting inefficiencies, Celonis provides tools to help companies fix them. The platform uses artificial intelligence to create simulations of business processes that decision-makers can harness to test operational changes before implementing them. A logistics manager, for example, could check if a planned change to the way the company ships orders to customers would increase or decrease package arrival times.

Celonis has significantly expanded its lineup of department-specific features recently. For procurement teams, it offers a tool that can set up an automated auction when a company receives competing bids from potential suppliers. For inventory management professionals, Celonis offers dashboards that display operational issues such as a product shortage.

Such department-specific features enable companies to tackle more types of inefficiencies with Celonis’ platform and thereby help them realize a bigger return on their software investment. That, in turn, ultimately enhances the startup’s value proposition. The $1 billion funding round announced today should enable Celonis to expand spending significantly on new feature development.

The startup will also expand sales activities to help it win more customers. Celonis already has several thousand clients, including major enterprises such as Dell Technologies Inc., Comcast Corp. and Splunk Inc., which participated in Celonis’ latest $1 billion round.

Celonis says demand for its software is increasing rapidly. The startup disclosed this morning that it’s growing by triple digits year-over-year, though it didn’t provide specifics. Assuming that the growth refers to Celonis’ top line, it means that the startup has more than doubled revenues since mid-2019, when it disclosed sales of more than $100 million.

The strong demand for process mining software is driven in part by enterprises’ rapid adoption of robotic process automation. RPA tools help companies reduce costs and human error by using AI to automate repetitive business tasks that are normally performed manually. To apply the technology in their operations, companies must first identify the manual processes that can be automated with AI, which is where process mining products such as Celonis’ platform come into the picture.

RPA market leaders UiPath Inc. and Automation Anywhere Inc. both have partnerships with Celonis. At the same time, the companies have introduced their own features to help customers find inefficient processes. IBM Corp. is in a similar competitive position. The company in April acquired Celonis rival myInvenio for its process mining software but the same month announced a broad partnership with Celonis to train 10,000 consultants in using Celonis’ software.

The extra $1 billion on its balance sheet will put Celonis in a stronger position to navigate the process mining market’s complex competitive environment. Overall, the startup has raised about $1.36 billion to date.

Looking ahead, Celonis appears to be preparing for an eventual initial public offering. The startup announced today that it has appointed Carlos Kirjner, a former Google LLC vice president of finance, as its chief financial officer. Hiring a CFO with public-company experience is a step startups often take before they well stock for the first time.

Image: Celonis