Moov: 3 Reasons NFX Led Their Seed

Written by James Currier
James is a General Partner at NFX, a seed-stage venture firm headquartered in San Francisco.

NFX Moov

Today Moov announced their $40M Series A led by Tiger Global, coming 18 months after NFX led their $4.4M seed round.

Moov Technologies is the #1 B2B platform for buying and selling used manufacturing equipment focused on the integrated circuit manufacturing industry. It integrates payments, logistics, and financial services. The IC industry is going through remarkable evolution and expansion in the US, particularly in the Phoenix area. It’s also experiencing significant shortages of equipment. Manufacturers in the IC industry have traditionally looked to phone calling brokers, now they can turn to Moov’s 10X digital experience.

Founded by second-time founders Steven Zhou and Maxam Yeung, Moov started in 2018 in San Francisco. They have significant operations in the Phoenix area, but have been named one of the 101 Top San Francisco B2B Companies and Startups of 2021.

Here are 3 reasons why NFX invested in Moov.

 

1. We Believe in B2B Marketplaces

As we detailed in several essays like 24 Ways B2B Marketplaces Win, Fintech Enabled Marketplaces and in The Marketplace Scorecard, we’re believers that the 20 year wait for B2B marketplaces ended 3-4 years ago. We’ve been investing in them since then, and Moov seemed like an obvious fit to that thesis. There are 100’s of vertical B2B markets which will digitize in the next 15 years into marketplaces, and integrated circuit manufacturing equipment is a fantastic leading vertical in this broader move.

 

2. Moov’s Software Changes The Numbers For Their Industry

One big question with all B2B marketplaces is “How much software can you really apply to the business? In other words, how much human labor and friction can really be replaced with software?” Everyone in the B2B transaction is gunning for the same thing: margin. So every node in a B2B marketplace is trying to preserve some information advantage over the other nodes and thus they don’t want information to be fully transparent as you get in an eBay. Transparency leads to more efficient pricing which can lead to lower margins. It doesn’t have to, but this is what the businesses fear. This fear is one of the reasons B2B marketplaces have been so resistant to software for the last 20 years and why still today most existing markets are done purposely with so much friction by personal relationships, phone, email, fax, bank transfers as they have been done since the 1950’s.

Turns out Moov, compared to other verticals we’ve seen, can replace a lot of the transaction process with software. That means transactions can take days not weeks or months, and the equipment can be delivered in weeks rather than 6-8 months. There is higher accuracy and fewer mistakes which means more transactions can happen faster. It also means compliance increases for both sides. Financing is readily available with a click of a button because Moov, with all the data, can immediately underwrite supplier or buyer financing or insurance. This again, increases the number of potential transactions for the entire sector. All this earns Moov a 94% customer approval rating. Moov software allows them to increase sales every quarter without hiring more people. There is a cumulative virtuous cycle around the software that improves all the metrics in the industry.

 

3. Founders

The founding team had spent 10 years in this very market managing transactions by hand the old-fashioned way. They knew the buyers and sellers personally. They knew the brands of equipment, the models of equipment and the equipment specs in their heads. They have the trust of the industry. They are committed to speed and to bringing software to this sector. They have a Silicon Valley mindset, which I would characterize as both comfortable with experimentation and having a long-term outlook with a firm commitment to doing something huge, not something small.