Supply chain management, logistics, and shipping don’t sound like the most exciting industries. Although startups in these industries don’t tend to produce mobile apps used by millions of people, have flashy websites, or engage in stereotypical startup shenanigans, they are changing the way millions of people get the goods they order.
On Tuesday, Bringg, a “customer-centric” logistics platform for enterprises announced a $10 million Series B round led by Aleph, a Tel Aviv-based venture capital firm. The Coca Cola Company and Pereg Ventures followed on their respective investments in Bringg’s Series A. The company intends to use the new funding to grow its presence in existing markets, which consists of customers in some 50 countries, and into new markets across the globe.
Raanan Cohen, Bringg’s Cofounder and CEO, said in a statement on the company’s website: “Amazon raised the standards when it comes to delivery, we provide the tools that enable any company to match their logistics excellence.” Providing businesses of any size the kind of visibility and control of the delivery process that Amazon has is an ambitious goal. Bringg, however, is not the only company using software to help enterprises deliver product to customers in the physical world.
Bringing Capital To Shipping & Logistics Startups
Venture capital investors have lately taken a keen interest in the logistics, supply chain management and shipping market, which measures in the trillions of dollars globally and in the hundreds of billions of dollars in the US alone.
Based on data from 502 deals struck with US-based companies in the supply chain management, shipping and logistics industries, it’s easy to see that investor interest has been piqued by this supposedly “boring” space. Over the past several years, there’s been a significant upswing in the amount of capital deployed into upstart logistics, shipping and supply chain management companies.
Between 2012 and 2014, the number of venture deals made with startups in the supply chain management, shipping and logistics categories increased by 160 percent.
And although the amount of individual funding rounds decreased somewhat since its peak in 2014, total dollar volume has increased at a steady rate. Between the start of 2013 and the end of 2016, the amount of venture capital money invested into these industries essentially tripled, a positive change of 297% in the space of four years.
Many Different Businesses All Solving A Similar Problem
Which companies have been the biggest beneficiaries of this major upswing?
Some of the most highly capitalized companies in this area are primarily targeted at consumers. According to Crunchbase data, the most-funded consumer-facing logistics companies are Postmates with $278 million raised to date, and DoorDash with $186.7 million in funding. Although both of these companies have recently launched merchant portals for their services, given the relatively short period of time these programs have been in place, it seems reasonable to infer that Postmates and DoorDash’s business is still firmly rooted in B2C services, at least from a revenue perspective.
It’s on the B2B side of the industry that some of the more novel product and service models show up. Here we find companies like Shyp, which picks up items that need to be shipped, packs them up, and forwards them on to their ultimate destination. Although Shyp got its start as a consumer-facing service, it’s increasingly being used by businesses. The company now offers portals for small businesses and large enterprise, and recently launched a partnership with Shopify to help merchants in certain local markets send their goods to customers. To date, Shyp has raised $61.2 million in venture financing, of which $50 million came from its Series B round led by Kleiner Perkins in 2015.
Other well-capitalized B2B logistics companies include:
- Flexport. A customs brokerage and freight forwarder, with over $94 million in venture financing.
- Zipline. A company that uses small drones to air-drop vaccines, blood, and other medical supplies in rural and other difficult-to-access areas in the developing world. The company has received $85 million in investment.
- Convoy. On-demand trucking service focused on inter-city logistics, has raised $18.5 million.
- Project44. A Chicago-based provider of shipping and logistics API services. Its $10.5 million Series A round in 2016 is significantly larger than the average for startups based in Chicago.
Shipping And Logistics, Moving Forward
Up until fairly recently, the logistics business, at a local and global scale, was conducted through a labyrinthine network of shippers, forwarders, and brokers, most of whom were only accessible by phone.
Just like the taxi dispatch industry was up-ended by digital spot markets for transportation services in only the last few years, so too has the logistics industry began the slow process of transitioning to this new way of doing business. It’s in those areas of friction in a legacy system that efficiency gains and a market foothold can be found.
It will be interesting to track the industry’s startup fundraising climate as legacy logistics companies like FedEx and UPS duke it out with the likes of Amazon and Walmart as those firms build out their own logistics capabilities. The number of players in the market can only grow so much before some consolidation—what some might call a correction—occurs.
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