Follow the Money

Dave AndersonManaging Director,

Supply Chain Ventures

Follow the Money

How Investors Will Shape the Future of the Supply

Chain

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 Are Strategics Investing?

(Transport, 3PL, Broker)

NYSE: RRTS

NYSE: FDX

NYSE: XPO

NASDQ: CHRW

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)

Unbundling FedEx

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?