Supply chain tech investment plummets year-on-year

Pitchbook Supply Chain Tech Overview 2023 finds venture capital activity nosedives by 82% on 2022, but that tech around SCM and haulage hold steady

Supply chain tech companies are struggling, with a colossal year-on-year fall in venture capital (VC) deal value for Q1 2023, a new study finds.

The Pitchbook Supply Chain Tech Overview 2023 finds that during Q1, VC activity fell $2.4bn – a 45% fall, quarter on quarter (QoQ), and a 82% decline year on year.

Within Q1, deal activity was higher in the first part of the quarter, with deals being hit later on by issues surrounding Silicon Valley Bank’s collapse

Across segments, freight tech saw the greatest fall, with QoQ deal value down 82%. Pitchbook says this huge drop-off is partly explained by the segment’s buoyancy in Q4 2022, thanks to massive deals from Einride and Volta Trucks. 

Enterprise supply chain management saw the smallest QoQ decline for Q1.

Notable deals in the quarter include Chinese software company JD Industrial Products raising $300mn, and Oxbotica – a UK-based developer of autonomous vehicles – raising $140mn. 

Of the tech deals struck in the freight sector, haulage is the area that continues to dominate. 

Trucking tech big focus for logistics investment

In the US, freight tech is weighted toward trucks and trucking logistics. Trucking represents most of the US’s freight movement, accounting for 65% of shipment weight and 64% of shipment value in 2022. 

A chronic shortage of truck drivers – which could be as high as 160,000 by 2028 – and high levels of fatigue and accidents has been a big focus for VC investors, says the report. 

Investment raised to date in autonomous truck technology represents the largest subsegment in freight tech, at 40%.

Weaning the trucking sector off fossil fuels is another major focus of freight tech investors. Greenhouse gas emissions for trucking represented 24% of total transportation emissions in 2021, and 76% of emissions from freight transportation specifically. 

Trucking logistics is another sizeable subsegment within freight tech. Startups have deployed AI and predictive systems to optimise truck loads, scheduling, and routing. 

The success and widespread adoption of ride-hailing apps, meanwhile, has spread to trucking logistics, enabling digital freight matching and a marketplace for shippers and brokers, as well as automation of many freight processes. 

The pace of technology adoption in freight tech continues to accelerate, says Pitchbook, with startups bringing new business models and efficiency to a highly fragmented segment of the supply chain industry.

PitchBook Data is an SaaS company that delivers data, research and technology across private capital markets. 

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