Cambridge Capital: Why we chose to invest in Boa Logistics
Benjamin Gordon, Managing Partner at Cambridge Capital and Matt Smalley, Principal at Cambridge Capital, share the Cambridge strategy and why they chose to invest in Boa Logistics and Flow Cold Storage
In September 2022, Cambridge Capital made a majority investment in Boa Logistics and Flow Cold Storage (collectively “Boa”), which are innovative, high-growth, third-party logistics companies specializing in refrigerated less-than-truckload (“LTL”) freight consolidation and cold-storage, led by industry veterans.
As we reflect on this latest investment, we should start with the Cambridge strategy.
The Cambridge Strategy
Cambridge Capital’s strategy is to build a concentrated portfolio of high-conviction investments in supply chain-focused tech and services businesses with staying power and outsized growth potential.
We begin with a set of key themes that we believe drive success in the supply chain market. Some of these themes include Man + Machine Wins, “Digital” Brokers and Supply Chain Visibility. Companies in these categories have tailwinds that provide an instant catalyst for growth.
We then look to find entrepreneurs who are the best leaders, building strong companies with significant growth potential.
Our team then conducts due diligence to validate our thesis. A new investment is the product of months of hard work from many sides: the founding and executive team, the Cambridge investment and operating teams, and various advisors and third parties that helped both sides finalize the investment.
For some firms, when a new investment is completed, it may feel like the finish line. However, at Cambridge, this is just the beginning of our journey with our new portfolio company partner. Once we close our investment, we then transition our focus to supporting our teams in achieving results for all stakeholders. Each situation is unique, so whether it’s assisting with key leadership hires, improving technology, finding customers and partners, or helping with cross-portfolio collaboration, all of the Cambridge team is there to be of service.
Why We Chose Boa
Boa Logistics, founded by Matt Mugar and Walter Lopes, is a unique third-party logistics company specializing in refrigerated LTL consolidation, in addition to dry freight, port logistics and cold-storage. Boa focuses on small and medium-sized shippers that manufacture food and beverage staples going into big-box stores. Because many of Boa’s customers ship to similar consignees (such as Costco, Trader Joe’s, Publix and Kroger), Boa has a unique operating edge in that it can consolidate multiple LTL loads into a single truck and have it delivered to the destination in less stops. This saves customers money, shortens transit times and allows consignees (receivers of the goods) to receive larger, fuller trucks that they can optimally unload. Boa has been able to support its strong growth in recent years due to the expansion of its carrier relationships that allows Boa to ship nationwide with ease.
The investment in Boa is an amalgamation of what we seek in every new portfolio company and a reminder as to why we continue to focus exclusively on where we can be the most impactful in supporting the amazing teams that we are fortunate enough to back.
To prioritize opportunities and ensure consistency, we came up with a framework to hold ourselves accountable to benchmark new potential opportunities, with six pillars: Cambridge thematic fit, market tailwinds, capital efficiency, strong tech-enabled moat, top team, and the ability to create a Cambridge-influenced edge.
We believe companies that score high on all these attributes have the largest potential to become winners, and we make sure that we only focus on companies that have all six attributes.
How Boa Compared
Boa stacks up extremely well on Cambridge’s key characteristics:
- Cambridge Thematic Fit — Boa fits three of Cambridge’s currently published investment themes: Man + Machine Wins, “Digital” Brokers and Supply Chain Visibility. In particular, Boa has established itself as a leader in cold chain LTL consolidation in Southern California, servicing customers shipping goods out of the West Coast to grocers across the US. We believe this niche focus and combination of people-driven relationships and leading technology will allow Boa to emerge as the definitive leader of refrigerated LTL freight nationwide.
- Market Tailwinds — we believe Boa’s strength in food logistics provides a recession-resistant foundation, as people will continue to eat regardless of economic cycles. And this is a large, growing market. Polaris Market Research estimates that the global refrigerated transport market is valued at $107 billion today and will reach $200 billion by 2030, implying a 7.2% CAGR. Boa focuses on mission critical transportation of domestically produced food and beverage staples which are typically delivered on weekly recurring schedules to large stores with stable demand. Boa’s focus on predictable food demand insulates it from global economic uncertainty.
- Capital Efficiency — Boa has exhibited strong financial growth over the past year, including EBITDA growth of 130%. Most of the growth was driven by existing customers asking Boa to do more, which highlights the efficiency brought on by operational excellence and a great reputation.
- Strong Tech-Enabled Moat — Boa offers customers leading temperature-tracking technology, which is a significant value proposition. Additionally, with Cambridge’s help, Boa will undergo a digital transformation to unlock operational efficiencies and improve its technology-related moat. By partnering with Cambridge, Boa will be able to offer customers, employees and third-party carriers improved technology solutions to save time and increase efficiency.
- Top Team — Boa’s founders have 20+ years of collective experience in logistics and have previously worked at leading transportation companies including Diversified Transportation Services, Landstar, Covenant Solutions, and Stone Control Inc. The founders have highly complementary skills across strategy, execution, sales and operations and have shown the potential to lead Boa in the next growth stage. Boa’s entrepreneurial and results-oriented culture is aligned with Cambridge’s values.
- Cambridge-Influenced Edge — Boa has developed a strong market niche with demonstrated success with key customers. Cambridge can build on Boa’s momentum by leveraging its established network of larger shippers and retailers to help source and win new business for Boa. Additionally, Cambridge can leverage its relationships with top supply chain leaders (particularly those that attend our annual conference held every January) to help Boa with recruiting, sales and partnerships.
We are excited to invest in Boa, fortunate for the opportunity to partner with an exciting company and founding team, and eager to help them accelerate into their next stage of growth. For any shippers with cold-chain LTL freight needs, or for any carriers that would like to work with an excellent organization, Boa can be an outstanding potential partner. Please feel free to reach out to us for a direct introduction.