Warehouse

Running a small or medium sized business (SMB) is hard enough. Doing so without modern software tools makes the challenge even more substantial. The problem is, most business software is either too complicated or too expensive to cater to this category.

Peter Daley, formerly the founder, CFO, and EVP of Strategy at construction industry Web application company BuildPoint, saw this issue first hand and set out to create a solution. The result was TradeSync, a business to business (B2B) ecommerce platform for Web and mobile.

Daley recognized that wholesale distributors interact with a large number of end customers, yet invoicing is still done primarily using paper. This means that purchase and sale information needs to be manually entered into a computer system on both the vendor and customer end of each transaction. When e-invoicing had been tried in the past, it failed because inevitably one party had to print out the PDF file and submit it in physical form to some other department within their organization. In short it was a nightmare.

TradeSync offers a solution that synchronize purchasing, sales, service, and invoicing processes between businesses. Since launching the earliest version of its product in Q1 2012, TradeSync has managed several hundred million dollars in transactions, from several dozen customers, Daley says, including “‘main street’ SMBs like construction contractors, as well as billion dollar enterprise accounts.”

The product is currently available via a Web dashboard, but mobile versions for both iOS and Android have been submitted to their respective app stores and will be available in the near future.

The TradeSync platform is available via a freemium SaaS model, with premium features priced on a per-user basis. The company divides its users, and thus its product, into two constituencies. “Customers” are those companies that purchase products and receive invoices. “Vendors” are those companies that sell products and send invoices.

The big challenge with TradeSync is that it’s a two-way street. The platform is only useful to a Customer if its Vendors are using it. The opposite is also true. TradeSync is therefore facing a major chicken and egg problem in terms of driving adoption. The good news in this scenario is that if this catches on, it’s likely to go viral throughout entire business networks, such as a regional construction industry.

The company will have to contend with other SMB-focused business software startups, including Los Angeles’ Lettuce, which offers a similar SaaS order management and fulfillment product.

Perhaps the biggest vote of confidence for the early company came earlier this week when it announced the addition of Intuit co-founder Tom Proulx to its board of directors. Proulx is credited with writing the original Quicken software and led the company for 11 years through its 1993 IPO. TradeSync will face many of the same challenges that Intuit did early on, making the former founder’s input particularly valuable.

TradeSync has raised $1.4 million in seed financing from “friends and family,” and will likely test the Series A markets at some point in 2013. The company currently employs just eight people, two of which are in sales – a number it will need to increase if it’s to accelerate growth.

Selling to SMBs is an incredibly difficult and resource intensive game. Those developing specifically for the category have historically struggled to find profitability at scale. The return on each successful sale pales in comparison to the seven figure sums that enterprise deals deliver, yet the work required is surprisingly similar. TradeSync doesn’t have a revolutionary answer to this question. But given Daley’s success with BuildPoint, I wouldn’t put it past him to figure something out.