3 Must-Haves for Early-Stage Supply Chain Companies
How do you know if a technology or product will actually impact and disrupt an industry, specifically one as complex as supply chain? A few weeks ago, General Partner Camila Noordeloos wrote a great blog about why Grand Ventures invests in supply chain technology. Her blog outlined three overarching reasons why investing in supply chain matters, and I started thinking about how to identify technologies that truly impact the industry.
Like all venture capital funded industries, supply chain investments grew significantly throughout 2020 and 2021 with deal value nearly doubling from 2020 to 2021 to $61B (Pitchbook). Surely, some of this funding changed the way leaders form supply chains today. Yet, recent survey results indicate that 83% of supply chain executives say their technology investments have not delivered the expected results.
As early stage investors (Seed to Series A), we at Grand Ventures look for companies with early signs of product market fit. The complexities of each enterprise’s unique supply chain makes discerning if a startup has achieved product market fit incredibly difficult. So, I wanted to dive into the key differentiators we look for when making new investments.
Best of Breed Solutions
Supply chains are complex and finding solutions that mostly solve a problem won’t win in the long run (see stat above on the 83% of supply chain executives who aren’t impressed by their technology). Mediocre technology permeates the market today, so startups truly stand out when customers tell us that this product is better than others in the space. But a product can’t just be the best at incremental improvements. Exponential changes in workflows, processes, and cost savings are required. When we first met Terminal49 last year, we were immediately intrigued by their “best in breed” solution. By integrating with ocean terminals, Terminal49 provides customers with the most accurate tracking for shipping containers, saving their customers money and time. In our due diligence calls with T49’s customers, they emphasized the importance of the product and the benefits with us over and over again.
Highly Technical and Sought After Solutions
While we love band aids that cover a scraped knee, software that temporarily solves the problem will never truly be a “must have’’ for enterprises. For example, when James Malley (co-founder and CEO) set out to build Paccurate, one of our portfolio companies, he was told not to even try. Many manufacturers today experience the pains of distributing orders efficiently, accurately, and cost effectively. But, solving the problem of efficient parcel distribution beyond a bandage required a highly technical solution. Paccurate developed an API solution that optimizes parcels packaging and distribution centers to lower shipping costs, corrugated waste, filler packaging material, and the manufacturer’s carbon footprint. We invested in Paccurate, because many companies have tried and failed to build their solution, or leverage tribal knowledge and other internal expertise. No other competitor provides the level of sophistication that Paccurate does, making their high technical solution a highly desired product.
Once Your Company Uses it, They Can’t Bear to Lose It
Our favorite companies develop solutions where customers could never go back to the status quo. While there will always be new iterations, product features, and enhancements, the core product needs to transform the current ways of doing things. Every supply chain leverages a multitude of technologies, from transport management systems to visibility software and warehouse management systems. We invested in Chain.io because their ability to connect disparate supply chain software platforms changes the way of working for supply chain leaders today. With Chain.io providing middleware to see data across multiple systems, the new opportunities mean that executives won’t go back to the old ways of working.
Have a product that fits in one of these factors? Or think we missed one? Let us know! Email us at info@grandvcp.com.
