CTRM Vendor Funding Part 2 – Amphora: Private Backing for Stability and Growth
A vendor that has significant longevity and that celebrated its 27th years anniversary this year – so long in fact that even I competed with it back in my days at TransEnergy – is Amphora.
In the relatively recent past, Amphora was the subject of a change of ownership because of which, Chris Mudry came in as CEO, and I spoke with Chris recently to discover a bit more about this event and Amphora’s subsequent turn around and growth in the context of looking at the importance of vendor funding. In the instance of Amphora, the buyout and subsequent funding was performed by private investors closely associated with the industry and with the Amphora solution. They remain the owners and funders today and there is no doubt that Amphora has benefited from their ownership and Chris’s stewardship of the business.
Back in 2018, Patrick Reames penned an article about Amphora being acquired by what he described as ‘experienced investors in the commodity and technology space.’ Amphora had been on the verge of failure and bankruptcy and, as Patrick wrote back then, “multiple sources indicated that the company’s ownership structure had made a deal difficult to navigate and had consistently frustrated attempts by a number of firms to acquire the business.” The new owners appointed Chris Mudry as CEO and tasked him with a turn around project. Chris had a track record of management experience in commodities including a stint as CRO at Mercuria. Since then, Amphora has had back-to-back record years in terms of adding customers, launched a new metals and concentrates CTRM, Alchemy, as well as several other modules and add-ons to its Symphony solution. Importantly, it has also migrated everything to the latest technology and continues to invest in modernizing and enhancing Symphony while – importantly – getting back to one branch of the software for all customers.
“We didn’t get any incremental revenue for modernising Symphony,” Chris told me. “The customers expect a vendor to maintain and update its software solution.” Customers view the support & maintenance fees or subscription to cover such initiatives. Customers also expect relatively clean software and, as Chris explained, this was also an initial focus for the new management team. “We have reduced what was thousands of open support tickets back then down to a handful while getting to a single version of the software and coherent release program to all customers. Customers are now using a well maintained, supported controlled version of the software that is clean and on a modern platform,” he said. Bear in mind, that when Chris took over, he explained that he had inherited a ‘support nightmare’ in which very little was “actually documented.”
Chris is quite candid in stating that in the first year, Amphora picked up four new customers largely based on trust in the new team and their personal connections. However, it was the support, backing and commitment of the new owners that also allowed the team to succeed. Chris also postulates that timing was also good as around the same time, ION had bought many of the other top CTRM providers and so Amphora got included on deals as a non-ION option for which there was some appetite back then putting it in deals that perhaps previously it may not have had access to. To succeed as a CTRM vendor, not only do you need to do everything right, but you do need a bit of luck to boot.
Chris describes the journey as a work of love. “I fell in love with Amphora while at Mercuria and I felt it was the best product on the market. My job as CEO was to help convince the rest of the market that I was right!” He went on to say that for example, he thinks it has the best formula builder available and it is his passion to explain Amphora’s benefits to the market. “We have had some success although of course, we don’t always win,” he said. Key to Amphora’s turn around has been a stable owner that supported the management team. Profits are re-invested in the software as opposed to taken out of the business. “The owners do not need to make a return that a usual private equity would require, but of course, neither do they want to see losses. In addition, we have no private equity investment or outstanding loans – we are debt free and probably the only CTRM in this position,” he told me.
For me, having watched the industry now for more than 25-years, Amphora’s story demonstrates many of the themes that we have seen over that time. Good ownership is essential and obviously so is access to capital. It does in fact almost take ‘love’ from management and owners to build a solid, customer-focussed and successful CTRM vendor for as Chris says, it would be easier and less risky to invest in bonds than in a CTRM vendor. Yet, products like Symphony are a critical requirement for commodity players and what they require is a vendor that is continually re-investing in modernizing and extending its software, ensuring that the software works as advertised and that the vendor itself has longevity.
As we will see in subsequent looks at different vendors on the market, there are many models for funding and supporting the vendors – each has pros and cons – but certainly, having a private investor group connected to the industry who understand the value of the software and are willing to hire and support the right people to ensure that a key product not only survives but thrives, is always going to be a good model.
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