Networking is undoubtedly useful for making connections and collaborations with other professionals in your industry. However, many people find that the effort involved in getting acquainted is arduous. The pandemic has only made this worse. Networking events and common working spaces used to be fruitful venues for connection. Now we’re confined to online alternatives. 

LinkedIn is the original online networking site. However, many users feel that the site’s design is ugly and that they receive too many spammy connections. More targeted networking venues are growing increasingly popular. Micro-communities of people with similar professional backgrounds and interests are cropping up everywhere, from engineering to finance and marketing.

However, micro-communities are a recent trend. Many industries haven’t yet received a new online venue to join. Professionals of all kinds now have the opportunity to create specific online groups to enable networking within their field.  

Procurement Foundry is an online community for procurement and supply chain professionals. The group is hosted on Slack. Members can join the Slack workspace and browse many different channels catered to specific job functions, topics, regions, and more. Members also enjoy relevant events, professional development sessions, and eventually coaching and consultative services. 

Procurement Foundry was launched in 2019. It has since enrolled over 2,900 members from 60 countries worldwide. The Procurement Foundry network is free to join but does require an application. Each member submits an inquiry with information about their professional experience. They are invited to join the Slack community only if they meet relevant requirements. Current members span a range of seniority levels and industry verticals and represent 75% of Fortune 100 companies. 

The network generates revenue from advertising. Partners place content in the Foundry’s email blasts, social media posts, and virtual event sessions. Partners are also invited to the Procurement Foundry Slack community to interact within branded channels. Procurement Foundry did not generate any revenue in 2019 and operated at a loss of roughly $31,000.

CEO and founder Mike Cadieux has over 20 years of experience in procurement and sourcing. He previously served as the Vice President and Chief Procurement Officer of Publicis Groupe. He later transitioned to launch a procurement consultancy called AMPlify Resources Group. Cadieux clearly created Procurement Foundry to meet a networking need that he experienced during his own career in the field. 

Procurement Foundry’s COO is Yashar Kafi, a digital transformation consultant who works with Fortune 500 companies to implement technologies like blockchain, SAP, Oracle, and more. Kafi joins Cadieux as a Managing Partner at AMPlify Resources Group. 

In the future, Procurement Foundry will expand revenue streams to include member educational programs, staffing and placement services, research, and even group purchasing organization (GPO) agreements. Eventually, Procurement Foundry plans to launch a paid premium membership that will include additional content and event access. This group is apparently in pilot testing and is waiting for a critical mass of members before going live. 

Procurement Foundry aims to use the bulk of crowdfunded capital to advertise the network among procurement and supply chain professionals. Additional proceeds will be used for general administrative costs.

After careful consideration of the company’s areas of opportunity and seeming weaknesses, Procurement Foundry has been ranked as an Underweight deal. Investors should consider three critical uncertainties when evaluating this opportunity: 

• Niche concept without significant proof of product-market fit: While targeted online networks are increasingly popular, Procurement Foundry operates a particularly niche group. Companies employ a median of 34 procurement professionals per $1 billion in revenue. Pairing that figure with U.S. annual GDP indicates that there are only roughly 20,000 procurement professionals in the United States. Therefore, the growth ceiling for Procurement Foundry is much lower than a typical startup. To account for this small amount of potential users, Procurement Foundry would need to generate a large quantity of revenue per user to achieve substantial growth. This leads to the next uncertainty investors should consider.  

• No traction in monetization: Successful monetization is the most important concern about Procurement Foundry’s business model. However, Procurement Foundry does not report any revenue for 2019, its first year in operation. The company’s raise page indicates that it achieved profitability in April 2020. It is not exactly clear where this revenue came from. Sponsorships and advertising partnerships are mentioned with little detail. It seems unlikely that partners would be contributing significant dollars to market to a community of under 3,000. Therefore, Procurement Foundry’s ability to monetize on a meaningful scale is still speculative.

• Strong competitors: Procurement Foundry indicates on its raise page that there are already several scaled networking communities for procurement professionals. These competitors — including the Institute for Supply Management and Procurious — are more robust companies that offer research, certifications, professional development courses, and more. Procurement Foundry’s only differentiator seems to be a vetted membership pool. However, it is not clear whether vetting members dramatically increases value for users in a way that elevates Procurement Foundry ahead of these well-developed competitors. 

Procurement Foundry is undoubtedly a helpful community for its members. It is certainly possible for the concept to expand into additional events, coaching offerings, and more. However, it is not clear that the company has the potential to achieve a valuation that would generate significant returns for investors. Put simply, this seems like more of a small business than a venture-backed company. Therefore, Procurement Foundry is an Underweight deal.