Developer Of Pricing Software Gets $16M Boost

Cargill has 96 business units in 57 countries around the world, which could lead to lots of new customers for software vendor DemandTec. The San Francisco startup received $16.7 million in third-round funding last week from Cargill and others as it looks to expand to Europe.

DemandTec's PriceCenter software measures net profitability of individual items for sale in certain stores and then adjusts the prices to sell more of the higher-profit items. Its customers consist of supermarket and drug-store chains, including Longs Drug Stores. The science behind the software relies on intricate algorithms and sophisticated customer-modeling techniques that combine point-of-sale purchase history, product attributes, promotions, and competitor pricing with high-speed computing.

One of Cargill's businesses is processing and distributing food products. Its customers are super-market chains that would be candidates for DemandTec software, a Cargill company spokesman says. The technology, called demand-based management, also could boost the bottom lines for companies in vertical industries besides just retail and packaged goods, Cargill vice chairman and CFO Robert Lumpkins says.

DemandTec, which received its first round of funding two years ago, plans to be profitable sometime next year. Besides expanding abroad, says chairman Mike Neal, the company plans to unveil a software tool that helps retailers better plan and man-age promotional campaigns.