Canals, a Miami-based AI software maker for wholesale distribution, has raised $35 million led by Base10 Partners — its first institutional round after bootstrapping to more than $5 billion in processed payables and over 8 million sales orders since launching in 2022.

The company works with more than 100 distributors, including DSG, Locke Supply and The Kendall Group. Its software automates the transaction flow between distributors, suppliers and customers — quoting, order intake, invoicing — tasks that at many distributors still run on PDFs, spreadsheets, email chains and manual re-keying into aging ERP systems.

The target market is large: wholesale distribution is an estimated $8.2 trillion industry, yet order formats arrive inconsistently, invoices get lost in inboxes, and workflow knowledge often lives in the heads of veteran employees rather than in systems.

What the numbers claim

Canals says customers have doubled quote conversion rates and reached 96% touchless invoice processing. These are company-reported figures without disclosed baselines or customer-by-customer verification, and the round announcement did not break out revenue, gross margin impact or inventory metrics. But the direction of the claims is consistent with where distributors' economics sit: faster quote turnaround should lift quote-to-order conversion, and touchless invoice processing directly attacks administrative cost per order.

For distributors, the operating logic is straightforward. Every order that requires manual entry adds labor cost and error risk without adding gross margin. Every quote that sits unanswered while a CSR retypes data is a quote a competitor may answer first. At scale — across hundreds of thousands of order lines — even single-digit improvements in conversion and touchless rates compound into measurable operating income.

Investor and customer commentary

Jason Kong, general partner at Base10 Partners, framed the bet as a market-quality call. "From conversations with many Canals customers as well as our own contacts in wholesale distribution, we kept hearing the same thing over and over again: Canals is customer-obsessed and delivers outstanding ROI. Its technology and team are clearly the best in the market," he said in the announcement.

Canals CEO and co-founder Michael Delgado argued that prior generations of automation failed on the messiness of real distribution data. "Our customers operate in the real world, with messy inputs, imperfect data, and constant change, which made automation difficult to impossible before AI," Delgado said. "We've built the most accurate AI for wholesale distribution to finally free teams from manual data entry and enable stronger relationships across the supply chain."

The most detailed validation came from a channel insider. Paul Kennedy, CEO of DSG and current chair of the board of directors of the National Association of Electrical Distributors, called the product a benchmark for his business.

"As DSG has expanded to serve customers across electrical, HVAC, plumbing, and waterworks, technology has always been a key enabler of our growth. Canals is now our gold standard for how technology can continue driving the business forward," Kennedy said. He added: "There's a lot of hype when it comes to AI, but Canals is the real deal, the best-in-class product delivering real results that matter."

DSG's endorsement matters beyond one logo. A buying-group leader and NAED board chair publicly attaching his name to a vendor signals procurement-level scrutiny, not a pilot-department experiment.

Context and open questions

The round lands amid a wave of AI funding aimed at unglamorous industrial processes — Refresh Miami notes recent raises including Pelico's $40 million for supply chain AI — suggesting investors see distribution back offices as a repeatable software category rather than a niche.

What the announcement does not disclose: Canals' revenue, valuation, gross margins, average contract value, or how the $35 million will be allocated across engineering, sales and vertical expansion. The customer count of 100-plus distributors against $5 billion in payables implies substantial per-customer volume, but without disclosed contract terms, per-seat or per-transaction pricing remains unknown.

The traction-without-venture-capital history cuts both ways. It demonstrates real customer willingness to pay — Canals reached scale on commercial revenue, not subsidized growth. It also means the company now faces the discipline question that comes with a $35 million balance sheet: whether it can scale beyond its current vertical concentrations in electrical, HVAC, plumbing and waterworks distribution without eroding the implementation quality its customers cite.

With Base10's capital behind it and named reference customers in three of distribution's core verticals, Canals will now be measured on whether doubled quote conversion and 96% touchless invoicing hold up as it pushes deeper into an $8.2 trillion channel still running on manual entry.