Financial investors eye logistics start-ups and disruptors

Logistics and delivery start-ups and industry disruptors offer good investment potential as they impact and change the traditional freight and parcel markets, financial experts said at this week’s Deliver conference in London.

That was the key message from three financial investors to an audience of 800 retailers, logistics managers and other stakeholders in a plenary session of the conference, which took place at Twickenham rugby stadium.

Charles Letourneur, Managing Partner of Alven (France), said that external investment in the logistics industry had been relatively low and slow in the past, with about $200 – 300 million invested in Europe in the last three years. But conditions are now changing significantly.

“Now we see the whole industry is disrupting very fast, it’s accelerating,” he commented. AI and robotics were two prime examples of new technologies changing the sector. “The last-mile is very interesting. Delivery and logistics will be crucial for (retailer) competitiveness, that’s clear for us,” he said.

In terms of investments, he cited the examples of French final-mile collection network Pickup in which he had invested and later sold to La Poste, and an unnamed company using artificial intelligence (AI) for cargo shipping.

However, Letourneur emphasised: “I don’t believe this industry will be disrupted like music or media. I think it will be a combination of historical players and new entrants.”

He explained: “The disruption will come from big players themselves. For start-ups it’s very difficult to become a big player alone. The mindset of large companies is changing and that will be a driver for growth.”

Thomas Rubens, Partner at DN Capital (UK), explained that investment had been low in the past as the industry had been dominated by asset-heavy large players but this was changing as asset-light start-ups entered the market. “Venture capital now sees more opportunities,” he commented.

Rubens described warehousing as an “exciting area” with developments such as the transformation of Ocado from an online grocer into more of a warehousing technology company.

Overall, logistics should be seen as “a value driver, not a cost centre,” Rubens urged the audience of retailers and logistics companies. “There are a lot of solutions out there, a lot of great companies to solve problems. Give their solutions a try.”

Christopher Steinau, Investment Manager at Northzone Ventures (UK), said that e-commerce firms have “a different DNA” than longer-established firms and are “ready to try out” new things. He cited the example of Flexport, which has grown rapidly to revenues of several hundred million dollars and a valuation of $1 billion.

Moreover, “there will always be retailers wanting to compete with Amazon. That will be a driver for technology companies,” he added. For example, “there is an opportunity to build an Airbnb of warehousing” by taking advantage of unused capacity, he said.

Steinau added: “The example of Flexport shows you have to be on your toes to defend yourselves against new entrants. So be open and experiment more with new services.”