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Logistics is a significant part of supply chain management that refers to the storage, management, transportation, and delivery of products from one point of origin to the point of termination. The most common logistics business models include services such as packaging and moving, transportation, legal services, warehousing, inventory management, etc.
Lately, logistics market growth has been running off the charts due to its worldwide applications allowing businesses to mark their presence in the global market. The current global logistics market stands at a value of $10,115.6 billion and is forecasted to grow at a CAGR of 5.7%, reaching a value of $13,326.3 billion by the year 2027.
There are several reasons why logistics businesses are high in demand, a few of them being:
Moreover, with the expansion of eCommerce services by over 25%, global attention seems to shift towards investing in various supply chain and logistics management projects. This is probably why companies on a global scale are working on innovative logistics solutions and actively looking for investors for logistics startups. Studies suggest that the funding for logistics startups almost doubled in 2021 compared to 2020 giving birth to several logistics subsectors.
A recent analysis of a sample of more than 500 logistics startups exhibits investments of $80 billion by investors for logistics. This funding for logistics startups was analyzed by industry, region, time, and according to the impact of the global pandemic.
Under such winning circumstances, working on your own logistic startup would be a great idea. However, finding an investor for your logistics business might still be a rock-solid challenge. But don’t you worry; this article familiarizes you with the whereabouts of current logistics market investments and guides you on how to get investors for your logistics startup. So make sure to stay tuned till the end. Let’s begin.
As mentioned above, the global pandemic immensely accelerated the growth of eCommerce by 25% in 2020 and a further 11% in 2021. This is the primary reason why investors are interested in logistics operations, specifically in the largely untapped potential markets. Investors for logistics are keenly interested in funding logistics startups based on eCommerce delivery apps, supply chain visibility, and last mile logistics management.
An analysis depicts that various last-mile delivery businesses, logistics intelligence providers, road-freight marketplaces, and supply chain visibility easily get funding for logistics startups. Here’s a graph exhibiting the same.
As the graph demonstrates, the on-demand logistics demand for groceries, household goods, and other products has emerged as a favorite subject for logistics investors. In addition to this, the angel investors for logistics actively fund projects and ideas based on on-demand logistics app development, road freight solutions for logistics venture capital, and parcel networks for on-demand domestic deliveries. Now, coming to logistics startups that offer supply chain visibility, let’s discuss this in detail.
The topic of supply chain visibility in the process of logistics investments gained attention when the funding for startups that address visibility tripled in 2021. With more logistics investors realizing there is a need for more flexible and agile digitally transformed supply chains that can quickly adapt to external factors like transport restrictions, visibility is in demand.
By integrating greater supply chain visibility, logistics businesses can enable stability and improved communication between various stakeholders to pinpoint the issues better.
For instance, Appinventiv improved supply chain visibility for a global manufacturer by 60%, which resulted in a 30% increase in everyday operational efficiency and a 40% reduction in transport and logistics costs. By integrating an intelligent logistics and supply chain software solution, this US-based enterprise became more responsive to its customer’s needs. Moreover, the process automation solution allowed the supply chain business to focus on other challenges.
Overall, the logistics business models to receive funding dynamically range from transport, fulfillment storage, parcel services, courier express, and their subcategories. Here are the segments with the most percentage of funding.
Now that we are aware of the factors that can help you find investors for your logistics startup, it is time to look at some of the promising logistics startups.
If you want to get a closer look at logistics industry trends that have prevailed and helped startups with logistics investments, you must look at the businesses that managed to benefit from the logistics business industry.
UberCARGO is a popular on-demand truck service in the global logistics sphere. The truck arrives within minutes, and the user can either avail help from drivers or load his package himself. The business app lets users track their package and delivery status in real-time. This top-loaded logistics startup proved that it’s more than a ride-hailing service.
The service is currently only available in Hong Kong. However, the company, with funding of $1.2 billion, is thinking of expanding in various other regions.
Transporteca is a popular website that offers consignees and shippers a feature to compare prices on transportation by sea. You can also compare the transportation cost of different operators with the website to make a cost-effective decision. Logistics investors funded $1M to Transporteca startup established in Copenhagen with concentrated shipping from Asia to Denmark. However, the company is on the verge of distributing services globally.
Flexport is another complex platform for freight forwarding that looks like an online dashboard. Here, users can compare options, book trucks, and cargo, and manage and track the deliveries in real-time. The platform offers marine and air cargo transportation along with insurance services. This startup attracted logistics investors to fund $935 million in total to boost resilience in global supply chains.
Makespace is an excellent on-demand solution platform for storage and management. The platform is popular for providing storage space in different regions along with good receipts. Users can also search for cargo and shipment vans to move and track goods. Makespace received a funding total of $142.4 million from logistics investors and Fred startup investors.
TruckTrack is a unique and popular cloud application to manage businesses. This app is known to display all statistical data for shipments and explain business indicators. Not only this, users get recommendations on business optimization within the app. TruckTrack received seed funding of $394.6k for leading logistic technology investment.
Various other logistics startups were able to find business investors and receive robust funding. To get your investment for a startup, remember that convenience and optimization are two significant components of the logistics business.
Take these factors into consideration when you are looking to fund your niche in the logistics industry. Now, coming to our final section of the discussion, how to get funding for your logistics company and ways to find the right investors for a logistics startup.
[Also Read: How to Build a Transportation App Like Moovit?]
If this is your first time working for a logistics startup, a thorough survey of your niche in the industry is a must. Further, a logistics venture capital studio can help you gain sufficient finance for your startup.
You can also work with reliable logistics software development services and benefit from the expertise and experience of industry experts who have been there before. A logistics development company will also support you with various innovative ideas for your project that address current market needs.
When you are done with your project, you can follow the six ways listed below to find investors for logistics startup;
For new businesses, building networks might be a struggle; however, it is crucial to gain trust from competitors and industry peers to establish a business. Investors closely look at the trust factor, especially when their money is involved; therefore, ensure to mark a good impression.
Logistics conferences, exhibitions, and events are the best places to find potential business partners. See if you can connect with logistics companies that can assist you financially or help establish a business base. Choose a partner or investor who is willing to guide you throughout scaling your business.
Before reaching out to your potential investors, it is also essential to know them well so you can understand their demands. On the other hand, you will also be able to analyze what benefits they can get out of your logistics startup. Identify relevant reasons why they should provide funding for your logistic startup.
Another thing to focus on is their investment background. Understand what kind of logistics business models they have invested in the past. By doing so, you will be able to find investors that are the best fit for your logistics business.
After you get in touch with your potential investors, create an engaging pitch related to logistics investors and their investments. When you make a pitch, make sure to put yourself in your investors’ point of view. Think, What would convince you to invest in a logistics startup if you were an investor?
Along with this, present a business plan that can be achieved realistically. You can also share your business plan with your logistics software development team to analyze if it’s credible enough. Fuhrer, involve your logistics investors in future business planning.
It is advisable to join a seed accelerator program for new logistics startups. Especially if you have no industry connections, these programs will guide you with mentorships, training, and seed funding to scale your idea. Such programs also offer necessary assistance to help your startup project thrive in times of crisis.
Here, you will be given a chance to work with other logistics startups to widen your connections. If you performed well, you would receive a badge that helps with negotiations in funding. The badge signifies that you are a reliable and skillful logistics business partner to your logistics investors.
This is an obvious step that goes a long way. Rather than just stating benefits by investing in your logistics idea, make sure you show them the ROI in numbers. Demonstrate how you can achieve results in the given time period and when can your logistics partner start gaining benefits.
Getting your investor in logistics is easy; however, maintaining your logistics business for the long run is a challenge. Confident investors only offer funding for logistics startups with a good record in the industry. For this, you can create a little background story of how you came up with the idea and what led to the success of your logistics company. This helps build a level of attachment to your logistics brand and get investment for your startup.
The biggest fear of an investor in a logistics startup is the failure to infiltrate the supply chain and logistics market. Therefore, consider the logistics market trends and software programs to boost the efficiency of your logistic ecosystem.
Investors for logistics look out for trending solutions such as storage space advancement, supply chain cloud management, etc., that require low, upfront cost and yield great results.
You can check out the top technology trends in the market to understand what stays most in demand and what received the most startup funding in logistics.
Appinventiv is a leading company that offers logistics software development services to startups and enterprises. We help startups convert idea concepts into deployable MVP products in a low launch time. Our course of action involves discovery workshops, scoping sessions, and business analysis, where we define and elicit your business’s functional and non-functional requirements.
Our logistics suite of services includes custom logistics software development, telematic software development, asset tracking, transportation and freight logistics software, and much more. To get started now, talk to our logistics experts and allow us to be a part of your success journey.