Melbourne startup Directo has raised $2.3 million in Seed funding for its B2B marketplace for the pharmacy sector.
The round was led by Sydney seed VC Investible to scale its networked two-sided online marketplace, which offers B2C-like price transparency, immediacy and convenience while streamlining logistics and invoicing.
Founder Gavin Upiter said Directo’s proprietary enterprise technology platform transforms the management and interactions of the supply chain for over 500 pharmacies by connecting them directly with more than 80 suppliers and wholesalers on about 30,000 products.
“The Australian pharmacy wholesale supply chain is a $20 billion-dollar annual market, so we see this platform growing exponentially over the next few years,” he said.
“The $2.3 million investment from key technology investors and Investible will upgrade the platform to ensure it can scale to manage this growth. This includes more AI and introducing other value-added services for both buyers and sellers.”
Upiter said the 6,800-strong pharmacy sector in Australia has always been very fragmented with many owner-operators, small groups, franchise networks and different suppliers.
“An average pharmacy can have 50 direct suppliers over and-above those that are available from the main pharmacy wholesalers,” he said
“This fragmentation and complexity of supply channels means the sector has been left behind when it comes to refining the back-end ordering, stock management and distribution of products.”
The Directo boss said pharmacy sector in Australia had additional challenges in its supply chain compared to other sectors.
“These include little corporate ownership, different buying groups and compliance levels, rebates structures and government subsidies,” he said.
“Our growth path has accelerated recently as we have worked hard over the last few years to build relationships with pharmacy groups and are now seeing ‘flywheel effects’ resulting in organic customer acquisition.
“An increasing number of pharmacies who see the benefits of being involved are now encouraging suppliers that they buy from. These suppliers, after they experience the advantages it brings, are now encouraging other pharmacies they service to join the Directo platform to unlock supply chain efficiencies.”
Investible investment director Daniel Veytsblit said they’d followed followed Directo’s build for more than two years.
“It is clear that Directo solves a pain point for suppliers, wholesalers and pharmacies. The platform can become integral in the sector, bringing significant efficiencies and opportunities to all stakeholders,” he said.
Gavin Upiter said half of the 10 largest private B2B marketplaces in the US have the same business model as Directo, targeting retailers as buyers with a range of supplies.
“The Directo business model has been proven in several other markets. We have added our sector specific expertise to ensure we address the historical challenges of the pharmacy sector in this country,” he said.