The supply chain continues to eat venture capital


A few years ago, if you heard someone talk about supply chains, chances are they actually worked in the logistics space.

No more. Ever since the pandemic first disrupted global trade in early 2020, everyone seems to be complaining about supply chains.

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Why have new cars become so expensive and so rare? supply chains. Why are there no parts to repair the washing machine? supply chains. Why is there no toilet paper? Supply chains (and yes, maybe panic buying).

If only someone could fix this damn supply chain, it is thought, then these problems could go away. Can’t some genius startup founders find a way?

Of course it’s not that simple. But looking at the huge sums of venture capital being poured into supply chain-focused startups, it’s clear that investors see a huge market for next-gen platforms to alleviate various pain points in logistics. And based on recent funding numbers, they’re not backing down.

Supply chain finance isn’t really slowing down

So far this year, investors have invested more than $7 billion in growth stages worldwide for supply chain-focused startups. That puts funding this year on pace to reach roughly 2021 record highs, which is no small feat given that investment in most startup sectors is contracting.

Using data from Crunchbase, below we’ve looked at supply chain-related investments over the past five years, tallying total funding as well as number of rounds. Here is the breakdown:

We also looked at the totals for US-based companies, which attract about half of all investment:

If you look at both the global and US finance charts, one takeaway is that supply chain finance numbers have remained at high levels for years. While an early unicorn, Katerra, focused on the construction supply chain, may have bitten the dust, others have emerged and raised even more capital.

Some are stunning rounds. So far this year, for example, the industry’s biggest funding recipient by far is supply chain software provider Flexport, which raised $935 million in a co-led February Series E. by Andreessen Horowitz and MSD Partners.

Flexport, which has raised $2.2 billion to date, touts its platform as a tool to simplify global trade by connecting everyone in the supply chain. Customers can use its software to track freight, monitor inventory, order from suppliers, comply with shipping regulations, and be alerted to disruptions.

Another big round went to Seattle-based Convoy, a digital freight network for shipping trucks that raised $260 million in an April Series E at a $3.8 billion valuation. . (More recently, its growth trajectory is showing signs of slowing, with the company cutting its workforce by 7% in June, citing expectations of deteriorating economic conditions.)

In Europe, meanwhile, Berlin-based Forto, a digital freight management platform focused on European and Asian markets, landed $250 million in a March Series D, bringing total funding to nearly $600 million.

The early stage is also active

Startup supply chain startups are also seeing action. About a third of global supply chain financing this year was pre-seeded through Series B rounds, according to data from Crunchbase.

There are also good sized rounds in the mix. Wasoko, based in Kenya, is a platform that local traders in several African cities can use to order supplies for delivery. The company raised $125 million in a March Series B round with Tiger Global as lead investor.

Another big deal was Afresh, a software provider that helps grocery stores track fresh produce, which pocketed $115 million in an August Series B with Spark Capital as lead investor. That’s the same amount that went to an April Series B for Choco, a Berlin-based app for restaurants to order from their suppliers.

Delivery of returns

With the IPO market largely closed for the past few months, it is difficult to extrapolate what kind of exit and return environment startup funders are in the blockchain space. supply will face over the next few quarters.

Last year, when the public markets were hot, we saw a few debuts take place. Berkshire Grey, a provider of robotic automation for manual supply chain tasks such as identifying, picking, sorting, packing and moving, went public in early 2021 through a SPAC merger . Like most companies that have taken this route to the market, stocks have fallen sharply in recent quarters.

Meanwhile, Symbotic, a provider of robotics technology and AI-enabled software for warehouse and supply chain automation that counts Walmart and SoftBank Vision Fund as backers, went public in June after have entered into a previously announced SPAC combination. Unlike most SPAC trades, its shares are above the $10 threshold at which most trades are initially valued.

For now, don’t expect many big supply chain debuts. But hopefully, behind the scenes, all this investment in logistics startups will pay off in the form of more efficiently managed supply chains. If so, maybe we consumers can finally complain about something else when we don’t get what we want.

Illustration: Dom Guzman

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