Supply-Chain Tech Startups Draw Suitors

"Logistics behemoths and startups are planning for another year of snatching up supply-chain technology companies.

For the past two years, as global supply-chain woes took hold, legacy shipping companies and startups fueled by venture dollars pushed up the value of merger-and-acquisition activity for young companies offering logistics-related software and hardware.

This year, the stock-market rout that cooled valuations for some private companies created a more favorable acquisition market, some startup CEOs say.

Venture investors pumped capital into startups operating in the logistics-tech sector on the thesis that helping to unsnarl supply chains will become lucrative business. That funding provided some startups with deep pockets they in turn are using to pursue acquisitions of fellow startups.

Meanwhile, large shipping corporations are racing to expand their reach across the business-to-consumer market and have turned to acquisitions and increased startup investing. For instance, Danish containership company A.P. Moller-Maersk AS is preparing to make more acquisitions in the U.S. as it aims to broaden its end-to-end reach over the supply chain.

The value of merger-and-acquisition activity of venture-backed logistics startups in the U.S. reached $2.7 billion in both 2021 and 2020, a nearly 69% increase from 2019, according to analytics provider PitchBook Data Inc. Globally, the value of these deals reached $6 billion in 2021 and topped out at $8.4 billion in 2020.

Fueled in part by a $185 million venture round completed in December, India-based BigFoot Retail Solutions Private Ltd., which does business as Shiprocket, has made several acquisitions in the past several months and is aiming to do more, Saahil Goel, co-founder and chief executive, said.

Shiprocket offers software that helps businesses organize and automate various shipping processes. In February, Shiprocket acquired India-based supply-chain startup Glaucus, which offers services such as inventory management and analytics. The purchase adds to Shiprocket's supply-chain services as it aims to capitalize on the massive e-commerce market in India, Mr. Goel said.

While capital has flooded the logistics-tech sector, Mr. Goel said not all startups have been able to raise capital, giving Shiprocket the opportunity to make purchases. The current market downturn could provide favorable deal-making conditions as valuations cool, or if startups in need of capital have difficulty raising a round they might be more open to an acquisition, he said.

Investors including food delivery startup Zomato, Temasek Holdings, Lightrock, and Moore Strategic Ventures participated in Shiprocket's December Series E funding round.

Chicago-based logistics-tech startup Project44 has been on an acquisition spree recently. The company made two acquisitions so far in 2022 and is planning to make several more in the first half of the year, founder and CEO Jett McCandless said.

Project44, which develops software that offers companies supply-chain management and visibility of their freight, made several acquisitions last year to broaden its data inputs and analytic offerings." [1]

1. Supply-Chain Tech Startups Draw Suitors
Vartabedian, Marc. Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 23 Feb 2022: B.4.