As Marc Andreesen said famously, “Software is eating the world.”
That statement is as true in logistics as any other industry. But in logistics, that trend has a unique twist. Many logistics tech startups are not located in San Francisco or Silicon Valley, but in the Midwest or Southeast where the customers reside.
As a venture capitalist who invests in Midwest companies, I want to use the case study of one startup we funded last year to illustrate how we look at venture investing in logistics tech. My fund, Comeback Capital, invested in PAXAFE, a startup focusing on contextualizing supply chain data to de-risk B2B shipments and enable dynamic cargo insurance.
At first glance, this does not seem like a promising investment. PAXAFE was entering a fragmented $18B visibility provider market filled with asset tracking solutions and visibility platforms. Providing supply chain visibility has become a commodity, especially if your perception of visibility is someone staring at a dot representing a real-time shipment moving across a screen.
But the lens with which PAXAFE looked at the function of visibility, and the approach and philosophy the company formed towards improving the quality of the data made supply chain visibility much less of a commodity product, and the investment opportunity very interesting.
A lack of real-time supply chain visibility leads to product theft, counterfeit, damage and loss through the supply chain.