In the past years, we’ve seen the importance of the transport and logistics industries. But there are still lots of challenges ahead. That’s why a disruptive logistics startup is not only going to make breakthroughs but also offers attractive investment opportunities for venture capitalists. We have the reasons why.
Digital transformation is key
The mass disruptions from COVID-19 have brought troubles to supply chains globally, but it has one positive side effect. Companies around the world are speeding up their digital transformations as businesses are scrambling to optimise their logistics practices. With the world relying on deliveries and eCommerce more than ever, startups that can contribute something to this new race for a better supply chain is a great investment opportunity. In Southeast Asia, startups like Liftit, FineEx and PricePalley have secured hefty investments from VCs for their visions as well as their market potential.
Who breaks through wins
COVID-19 or not, logistics startups that are pushing the boundaries of our supply chain future are proving to have great potential. It is often the new entrants, or some incumbents, that are offering something new. From tracking systems to courier coordination, from communication to optimising 5PL supply chains, these innovations, regardless of their scale, these entities are all bringing something new to the table. If there is a startup that has a promising future in disrupting a market or adding value to an existing practice, this can be worth investing. Startups that rely on unconventional delivery modes, such as crowdsourced delivery, drones, autonomous vehicles, and last-mile delivery raised up to USD9.9 billion in 2017, according to a McKinsey report published earlier this year.
Three key factors determine whether a logistics startup is worth a venture capitalist’s time and money:
- Good coverage of logistics steps: the McKinsey report earlier indicated that companies that can optimise platforms have an edge in the investors’ eyes; the company needs to specialise on one aspect of the supply chain
- Tech-savvy and offers something new: the same report illustrated the importance of digital technology to make disruptions and optimisations happen; a successful startup should be able to focus on this aspect
- Field expertise: needless to say, the company needs to be successful in at least one country or market, so their market knowledge and cultural fit can prove their robustness
Since venture capitalists set their attention on logistics startups as the next rising sector, the logistics field has attracted much talent and capital. As a venture capitalist, if you’re planning to seek the next star venture for your investment, seek a disruptive and innovative logistics startup.