follow the money dave anderson managing director, supply chain ventures
TRANSCRIPT
Why Are We Here?
Venture capital, private equity, and strategic investors help shape the future of supply chain by funding the innovation that creates new business models and capabilities.
Agenda• Introduction• Defining the investor market• Macro trends shaping investor thinking• Where are the supply chain bets being placed?• Why are logistics-intensive companies so
attractive to PE firms?• How can you survive if PE firms come
knocking?• Q&A
Introduction: Dave Anderson• Managing Director, Supply Chain Ventures
– Angel/early stage investor– Supply chain technology and hardware
• Notable exits: Kiva Systems, LeanLogistics, Optiant, SilverPop
• Current investments: Llamasoft, Steelwedge, Resilinc, Descartes
• Supply Chain Experience – Managing Partner, Supply Chain Consulting, Accenture– Vice President, Logistics Consulting, Temple, Barker & Sloane
Investors: Different Stage Different Focus• Venture Capital
– Angel/early & mid-stage companies looking for growth capital– Focus: Acquisition & IPO– Investing Horizon: 1 – 10 years– Notable names: Bain Capital, Charles River Ventures, Khosla,
Battery Ventures
• Private Equity– Mid-stage and mature companies that need a broader platform or
recalibration– Focus: Market rollup (critical mass or footprint extension)– Investing Horizon: 3 – 7 years– Notable names: Vista Equity, Francisco Partners, Warburg Pincus,
Accel/KKR, ABS Capital, MidOcean Partners, Greenbriar Equity
Investors: Different Stage Different Focus• Strategics – technology “platform” companies
– Mid-stage & mature companies that need a broader platform or have distribution & channel synergy opportunities
– Focus: Market rollup (critical mass or footprint extension)– Investing Horizon: 5-? years– Notable names: SAP, Oracle, Descartes, Infor, Manhattan,
Accenture, Brambles
• Strategics – logistics service providers– Transportation, 3PLs and broker/forwarders looking for global
reach, new offerings and scale economics– Focus: Market rollup– Investing Horizon: 5-? years– Notable names: FedEx, UPS, XPO Logistics, CH Robinson, Coyote
Logistics
Question #1
What best describes your approach to buying supply chain technology and services (e.g. software, hardware, carriers and LSPs)?
a. Use lots of innovative and smaller providers
b. Go with well know, traditional providersc. Use mostly traditional providers with a
smattering of smaller innovatorsd. I can’t keep up with all of the options
anymore!
What are the key trends impacting global supply chains and where are investors putting their money?• What’s on the worry list of
supply chain executives today?– Omni-channel distribution
– Technology upgrades
– Risk management/security
– Sustainability
– Social (collaborative) supply chains
– Globalization
– Outsource/Insource
– Carrier/competitor consolidation
– HR
• Where are investors betting on the future?– Last mile/mobile– IoT– Drones/robots– Big data– Industry consolidation
(software, providers)
Online Retailing Will Drive Logistics Market Changes
2017 UK economy online15%
5 year online growth in Western Europe
83%5 year online growth in the US
60%
5 year margin impact from Omni-channel
retailing
-11%2013 Holiday
Delivery Capacity Problems
Sources: Forrester Research & LCP Consulting
The Highly Connected World Will Radically Change Supply Chain Operations
Sources: IDC, Super Monitoring, Mary Meeker & ABI Research
150 Daily Smartphone Touches (individual user)
2013 Mobile devices outnumber global population
1.9B Smartphones & tablets sold in 2017
2B High speed broadband users in 2019
26B IoT devices in 2020
$1.9T 2020 global economic IoT value add
Send Data, Drones & Robots
$$$$Billions in
Yearly Investments
SecurityDelivery
Monitoring AssetManagement
Drones
FactoryWarehouse
Exploration Retail
Robots
Local DeliveryMining/Off road
Over-the-road YardWarehouse
Autonomous Vehicles
SecurityDelivery
Monitoring AssetManagement
Big Data
AssetManagement
YardManagement
Question #2
Which emerging supply chain trends will most impact your supply chain over the next 5 years?
a. Omni-channel retailingb. Internet of thingsc. Move to real time data and decision
making (e.g. Big Data)d. I have no idea and that’s scary!
Where Are Strategics Investing?
(Supply Chain Technology)Old School
(NASDQ: JDAS)
I2 Technologies
E3 FZ LLC
NYSE: SAP
NYSE: ORCL
Where Are Strategics Investing?
(Supply Chain Technology)New School
NASDQ: TRMB
NASDQ: DSGX
NYSE: ACN Outsourcing Assets
Where is Private Equity Investing?
TMS
Providers PEs Technology
Thayer/Hidden Creek
& OthersE3 FZ LLC
Where is Venture Capital Investing in Supply
Chain?
Big DataloT
Last Mile/Mobile Drones
(Food)
(MRM)
(Software)
(Parcel)
Question #3
How much have VC’s invested so far in drones in 2015?
a. <$50Mb. $50M - $200Mc. Over $200Md. I don’t know or care since they cannot
deliver refrigerators
Why are logistics and distribution-intensive companies attractive to private equity?• PE Focus: 3-5 year playbook and payback• How: 8+ years of historically low interest rates; plentiful
capital availability; over $500B in uncommitted capital• Interest (Logistics): Strong margins, minimal capital
expenses, macro growth in global logistics all make assets very attractive
• Interest (Distribution-intensive companies): Logistics and sourcing consolidation; scale economics create substantial cost reduction opportunities
• Post Acquisition Behavior: Operations rationalization, acquisitions for product/market growth, organic business revival
Surviving Change: What do you do if a PE firm shows up at your door?• Know how your logistics operations and
costs stack up against your competitors• Study PE behavior in recent acquisitions• Have a plan in place for rationalization• Be up-to-date on latest logistics technology• Role of insource vs. outsourcing in your
industry• Cooperate and learn
a. Thought it was greatb. Very Satisfiedc. Slightly satisfiedd. Dissatisfied
How satisfied were you with this session?