Dave Anderson
Managing Director, Supply
Chain Ventures

How Investors Will Shape the
Future of the Supply Chain

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.

• 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

• 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

• 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

• 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

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 providers c.
Use mostly traditional providers with a smattering of smaller innovators d. 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)

60 %
5 year online growth in the US
15 % 2017 UK economy online
83 %
5 year online growth in Western Europe
-11 %
2013 Holiday
Delivery Capacity
Problems
5 year margin impact from Omni-channel retailing
Sources: Forrester Research & LCP Consulting

The Highly Connected World Will Radically
Change Supply Chain Operations
$1.9T 2020 global economic IoT value add
26B IoT devices in 2020
2B High speed broadband users in 2019
1.9B Smartphones & tablets sold in 2017
2013 Mobile devices outnumber global population
150 Daily Smartphone Touches (individual user)
Sources: IDC, Super Monitoring, Mary Meeker & ABI Research

Delivery
Drones Security Mining/Off road
Autonomous
Vehicles Local Delivery
Monitoring
Warehouse Robots
Asset
Management
Factory
$$$$
Billions in
Yearly
Investments
Over-the-road
Delivery Big Data
Yard
Warehouse
Security
Exploration Retail
Monitoring
Asset
Management
Yard
Management
Asset
Management

Which emerging supply chain trends will most impact your supply chain over the next 5 years?
a.
Omni-channel retailing b. Internet of things c.
Move to real time data and decision making (e.g. Big
Data) d. I have no idea and that’s scary!

Old School
I2 Technologies
E3 FZ LLC
(NASDQ: JDAS)
NYSE: SAP
NYSE: ORCL

New School
NASDQ: TRMB
NASDQ: DSGX
NYSE: ACN
Outsourcing Assets

(Transport, 3PL, Broker)
NYSE: XPO NYSE: RRTS
NASDQ: CHRW NYSE: FDX

Technology
Providers
PEs
TMS
Thayer/Hidden Creek
E3 FZ LLC & Others

loT
(Software)
(Parcel)
Last Mile/
Mobile
(Food)
(MRM)
Big Data
Drones

How much have VC’s invested so far in drones in
2015?
a.
<$50M b. $50M - $200M c.
Over $200M d. 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

How satisfied were you with this session?
a. Thought it was great b. Very Satisfied c. Slightly satisfied d. Dissatisfied