An Upper Peninsula technology company that offers enterprise resource planning software for metal finishers and fabricators has landed an $84 million private equity growth capital investment.
Calumet-based Steelhead Technologies Inc. plans to leverage investment from Austin, Texas-based Mainsail Partners to expand its capabilities and develop the company’s suite of artificial intelligence-based tools that its customers use to maximize their shop floor efficiency.
Steelhead Technologies CEO Jeff Halonen co-founded the technology company in 2021 to help manufacturers eliminate manual processes and outdated, time-consuming systems in their factories. The company’s ERP system allows metal shops to use a cloud-based platform to streamline quoting, scheduling, inventory, production tracking, quality and accounting, compared to a series of spreadsheets and paper systems, according to a release.
“Stores that want to scale need tools and partners that can scale with them,” Halonen said in a statement. “Our customers are experiencing margin and revenue growth because they finally have a system designed to help them generate these opportunities. »
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Halonen said Mainsail’s investment could help Steelhead Technologies expand to serve “thousands of additional stores” that want to expand but are held back by inefficient processes.
In 2023, the company raised a $6 million Series A venture capital investment from Stage 2 Capital, C2 Ventures, and TIA Ventures. This followed a $2.2 million funding round led by TIA Ventures and C2 Ventures in 2022.
“We’re on an aggressive growth path,” Halonen said in an interview with Crain’s. after the series A increase 2023.
Halonen and his five co-founders all graduated from Michigan Tech, based in nearby Houghton. They formed the company as an evolution of three previous companies the founders worked at.
“There are thousands of these shops in the United States, and they are often low-tech mom-and-pop shops,” Halonen said previously, referring to the company’s typical customers in metal finishing, which often lack the sophistication demanded by leading OEMs in the aerospace and defense industries. “OEMs are still frustrated and wondering, ‘Should we do this work in-house?’ What they don’t want to do. Or do they continue to outsource it. We have visited hundreds of workshops and the pain is always the same.
To date, Steelhead Technologies said its customers have processed more than 1.6 billion parts using the company’s software.
Mainsail Partners, which has offices in Austin and San Francisco, California, typically invests growth capital in bootstrapped companies that have developed business-to-business software-as-a-service models. The company has raised nearly $4 billion over more than two decades.
The private equity firm was attracted to Steelhead Technologies because the company’s software brings “much-needed visibility and control to a market ripe for modernization,” Mainsail Partners principal Anthony Hayes said in a statement.
“Many metal finishers and fabricators in the United States have been in business for generations, but still operate the same way they did decades ago,” said Jason Frankel, partner at Mainsail Partners. “They’ve upgraded their equipment and materials, but often don’t have the digital infrastructure to tie it all together efficiently and cost-effectively. This is not an uncommon scenario in skilled trades and that’s why we believe in the impact that vertical software like Steelhead can have on their customers.”
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