Equal’s POV on Investing in Supply Chain & Logistics
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As part of Equal’s AGM this year, the Equal Product Owners did mini deep dives into the current investment landscape of our various sectors (see Adam’s great post on insurance and Simran’s on climate). Today, it’s my turn to share our thoughts on a sector that came en vogue in a major way in the last few years — supply chain & logistics:
COVID thrust the almost $2T industry into the spotlight and money poured in: Overnight, ports and warehouses across the global shut down but companies still had to find a way to move goods around the world. COVID made clear how many problems — and how much opportunity — there were within the sector and per Crunchbase, VCs poured more than $40B+ into supply chain & logistics tech from 2021–22.
Freight downturn affected companies of all sizes and unmasked unsustainable business activities: COVID pushed the freight markets to their highest but the music eventually did stop mid-2022. Unfortunately, many new companies — from carriers to brokers to tech startups — had entered the market at its high but didn’t plan for the low. In addition, many VCs subsidized economically unproductive activities that were quickly exposed as freight rates continued their collapse. Layoffs ensued across the board — from massive incumbents like FedEx and C.H. Robinson to hot tech companies like Flexport and Convoy.
COVID did create an acceleration in digital adoption: Despite the yo-yo in the freight markets, the supply chain has never been more ready for digital adoption and disruption. The pandemic laid bare the vulnerabilities and weakness of existing systems and has set in motion the urgency towards redundancy, resilience, and even reshoring.
Our full perspective is summarized in a deck here. We remain incredibly excited by the ample opportunities in supply & chain logistics and if anyone’s building in the space or interested in discussing the space further, feel free to reach out to chelsea@equal.vc!