PitchBook Report: VC Activity in Supply Chain Tech in Q4 2019

PitchBook Report: VC Activity in Supply Chain Tech in Q4 2019

With cost management remaining one of the top priorities for the supply chain, VCs are looking closely at emerging technologies to find solutions

Financial data and research provider PitchBook, Inc. released its Quarter 4 Emerging Tech Research report on supply chain tech on March 24. The report discusses global emerging technologies in supply chain, and the impact of venture capital (VC) funding, deals, and exits on aspects of supply chain tech.

The Q4 report provides a macro perspective on VC activity in supply chain tech, including investment trends and market maps of VC-backed companies. It studies the supply chain tech industry in four segments–enterprise supply chain management, warehousing, freight, and last-mile delivery–in the North America and Europe markets, giving insights into the opportunities and challenges within each.

While this report focused exclusively on North America and Europe, reports for the previous two quarters collated global data. The report on 2019’s first quarter was unavailable.

Changes in the supply chain were largely spurred by growth in the ecommerce sector. In 2019, ecommerce sales in retail alone amounted to over $3 trillion, and are expected to double by 2022. At $12.2 trillion, the Business-to-Business (B2B) ecommerce market valuation was six times that of the Business-to-Consumer (B2C) market in 2019, with the Asia-Pacific region staking a claim on 80% of the market share.

The report stated that the growth in both B2B and B2C ecommerce was the result of a spike in the middle-income population–who made up nearly half the world’s population in 2018–as well as the growth of the digital economy as an enabler.

PitchBook had previously found that the surge in ecommerce accelerated global business demands for quicker shipping, visibility on delivery and supply channels, as well as on-demand fulfillment of orders, making way for innovative technology companies to develop solutions for these gaps.

“Today’s global supply chain is a highly fragmented industry that includes a sprawling ecosystem of disparate providers, each at different stages of technological maturity,” the report noted.

An earlier PitchBook report also found that VC investors pumped about $19.3 billion into the supply chain tech industry in 2018; in 2019, they invested $10.4 billion, nearly half of the previous year’s total, into North American and European supply chain tech startups alone.

Key Findings

  • Helsinki-based Relex Solutions, which provides retail and supply chain planning solutions, raised $200 million in a late stage venture round on February 6–one of the industry’s largest in recent years.
  • Seattle’s Convoy, a digital freight network, closed its Series D at $400 million, leading to a 118.6% valuation jump.
  • Arizona-based logistics management firm GlobalTranz saw private equity owner The Jordan Company exit via buyout less than a year after acquiring it.
  • Storage-tech company Clutter, headquartered in California, was the highest-valued VC-backed warehousing company in Q4.
  • The report stated that “excluding Uber, last-mile delivery deal value has seen an upward trend over the past few years.” However, VC deal activity in 2019 saw a drop both in value and numbers as compared to the previous year.
  • It also mentioned that the food delivery market is more appropriate for late-stage startups due to their advantages in scale and capital.
  • The report noted that a higher number of supply chain tech startups raised funds in their first VC round in Q4 as compared to previous quarters.
  • 64% of these startups (not counting acquisitions, buyouts, initial public offerings, or companies that shuttered) did not raise any further, perhaps because they became self-sustaining. This percentage is marginally lower than that of the previous two quarters.

While ecommerce posits profitable opportunities, leveraging them against the backdrop of disruptive global events such as the U.S.-China trade war, shortages in the labor market, and more recently, COVID-19, is tricky business. But going by the Pitchbook report, VCs are staying optimistic.

Header Image by RH Supplies on Unsplash.

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