Broken Down? Supply Chain And Logistics Funding Diminishes

Chris Metinko

Venture funding for supply chain management and logistics startups such as Convoy, Uber Freight and Flexport surged during the pandemic. But in recent years, venture investment in the sector has plummeted an astounding 78% from its 2021 peak, and deal flow has likewise cratered.

Despite this downturn, the possibility of another global crisis could potentially reignite interest and investment in the sector.

Last year, logistics and supply chain management startups raised less than $6 billion in 741 announced funding deals, Crunchbase data shows. Those numbers are a steep drop from the nearly $28 billion such startups raised in 2021 — in a record high 1,554 deals.

Although 2021 was an aberration, last year’s funding numbers were even lower than those of 2023, when $6.7 billion was raised across 965 deals.

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The stark downward numbers contrast with the industry’s previous years of steady venture investment growth, which surged even higher during the pandemic. Supply chain disruptions and logistical challenges during that time led investors to invest heavily in new technologies, hoping for improved visibility and insights to manage global supply chains more effectively.

However, as the pandemic subsided and stability returned to the supply chain space, supply chain management startups — much like work-from-home tech and food delivery platforms — have seen a significant pullback from investors.

Last year, the logistics and supply chain management space saw fewer than a dozen deals of $100 million or more. Some of the larger deals involving U.S.-based, VC-backed startups in the supply chain management and logistics included:

In January, logistics giant Flexport raised $260 million from partner and e-commerce titan Shopify after burning through hundreds of millions of dollars last year, per a report in The Information. The San Francisco-based startup hit a peak valuation of $8 billion three years ago after raising a massive $935 million round.
In August, Altana AI, a supply chain management startup, locked up a $200 million Series C investment led by the US Innovative Technology Fund that values the company at $1 billion. The New York-based startup’s supply chain management platform gives customers deep insights and visibility into managing their global value chains — from the sourcing of raw materials to production to sale. Its platform uses AI to analyze data points through the supply chain to spot anomalies and risks.
Privately held moving and storage firm Zippy Shell locked up a $180 million deal from global investment firm The Carlyle Group in May. The deal also included a new debt facility led by JP Morgan Chase. Zippy provides an alternative to traditional storage and moving options by delivering containers to a customer’s location, which are then moved to a storage site or destination for unloading.

History being repeated?

However, just as the pandemic rapidly accelerated the industry, another global event could again drive more venture investment to the logistics space as companies seek greater visibility and insights to manage their global supply chains.

Startup investors may reconsider the space they left two years ago as new global trade issues loom, including substantial new import tariffs imposed by the U.S. and geopolitical tensions around the world.

U.S. President Donald Trump said he plans to implement a 25% additional tariff on imports from Canada and Mexico, and an additional 10% tariff on imports from China — with whom the U.S. already has a rocky relationship. In addition, the fighting in Ukraine and the Middle East have heightened the possibility of disruptions to the globe’s energy and mineral supply chains.

That leaves open the very real possibility of many looking to new tech — likely aided by artificial intelligence — to navigate both physical travel issues and a variety of complex compliance matters.

Amid that uncertainty, many businesses look to technology and digital solutions to help. The logistics and supply chain space space may be no different, aiding companies to quickly adjust sourcing methods, revise inventory and even reroute shipments.

While venture capital investment has bounced back in many industries since the slight pullback witnessed in 2022 and 2023, logistics and supply chain management remain an exception. We’ll see for how long.