Cambridge Capital: Why we chose to invest in ReverseLogix
This month, completed a in a leading reverse logistics software provider, As startups are generating explosive growth, and many entrepreneurs are considering their options for capital, I thought it might be helpful to share why we chose to invest in ReverseLogix and the thought process we apply when looking at investment opportunities in the supply chain sector.
It all starts with the Cambridge Strategy, so let’s begin there.
The Cambridge Strategy
We start with a set of key themes that we believe drive success in the supply chain market. These themes include e-commerce fulfilment, last-mile delivery, pure-play software niche leadership and supply chain visibility. Companies in these categories have tailwinds that provide an instant catalyst for growth.
We then look to find the best entrepreneurs, building the strongest companies with the healthiest growth potential.
Our team conducts due diligence to validate our thesis. A new investment is the product of months of hard work from many sides: the entrepreneur, her/his team, the , and various advisors and third parties that helped both sides finalise the investment.
Finally, when we complete a new investment, it may feel like the finish line. But it’s really just the beginning of our journey. Then the real work begins as we focus on supporting our teams in achieving results for all of our stakeholders.
Why We Chose ReverseLogix
So… how did we apply this thought process to our latest deal?
, founded by alum , provides customers with a SaaS-based solution to manage every aspect of the reverse supply chain. ReverseLogix has earned the trust of blue-chip customers, including , , , and others.
The investment in ReverseLogix is an amalgamation of what we seek in every new portfolio company and a reminder as to why we continue to exclusively on where we can be the most impactful with the amazing teams that we are fortunate enough to back.
Since there are a multitude of options and plenty of other investment firms in the market that all seem to be exploring the same opportunities, when the Cambridge Investment Committee had a virtual off-site in the Summer of 2020, we decided to brainstorm as a group as to where we should focus, spend our time and lean into potential investments –.
We came up with a framework to hold ourselves accountable to consistently benchmark new potential opportunities, with six pillars: Cambridge thematic fit, market tailwinds, capital efficiency, strong tech-enabled moat, top team, and the ability to create a Cambridge-influenced edge.
We believe companies that score high on all of these attributes have the largest potential to become winners, and we make sure that we only focus on companies that have all six attributes.
How ReverseLogix Compared
ReverseLogix stacks up extremely well on all six of our key characteristics.
- Cambridge Thematic Fit – ReverseLogix fits four of Cambridge’s currently published investment : e-commerce fulfilment, last-mile delivery, pure-play software niche leadership and supply chain visibility. ReverseLogix allows its customers to manage the influx of returns associated with the growth of eCommerce and automate the reverse supply chain from the last-mile (where returns originate) back to the proper location, with strong software that allows for real-time visibility and execution not previously available in the market.
- Market Tailwinds – ReverseLogix operates in what we at the Cambridge team sized as quite literally a globally, growing at a 19% CAGR. This market opportunity is going to continue to expand. As eCommerce grows at a 20% rate, have become an increasingly important problem, as consumers return 30% of what we buy online.
- Capital Efficiency – ReverseLogix bootstrapped itself for six years and has continued to grow profitability over time – even as they onboarded and serviced some of the largest customers in the world. By taking time to build the product and incorporate customer feedback to improve it, Gaurav and his team were able to succeed in complex sales environments with astute buyers – since the product was actually ready for prime time.
- Strong Tech-Enabled Moat – Perhaps the biggest strength of ReverseLogix is its cloud-native, flexibly architected software platform, as evidence by many satisfied customers across various industries and geographies globally. We actually first heard about ReverseLogix when not one but two current large told Cambridge about their strong reviews of the product, high customer satisfaction and suggest that we look at investing.
- Top Team – As with any investment in a bootstrapped technology company led by an innovative founder, the is another major reason why we decided to partner with them. The team draws on experience with companies like , , , , , and , with the right mix of high-growth SaaS experience and operational excellence required to achieve success in today’s enterprise software market.
- Cambridge-Influenced Edge – Since ReverseLogix has achieved strong product-market fit, exciting growth and high retention with existing major customers in a variety of industries globally, they are ready to exponentially scale up their sales and marketing engine. ReverseLogix sells to major 3PLs, e-commerce brands and manufacturers, and Cambridge has strong relationships with many of the leading companies in each category, especially those that attend our annual held every January.
For all of these reasons, we are excited to invest in ReverseLogix, grateful for the opportunity to partner with a terrific company and leader, and eager to help them accelerate their profitable growth.
Will we be proved right about all of these elements? Undoubtedly not. We are human, after all! As John Allen Paulos said, “Uncertainty is the only certainty there is, and knowing how to live with insecurity is the only security.” Still, by following a disciplined strategy, in partnership with talented management, we believe we can achieve a higher likelihood of success for our portfolio companies, our LPs, and our stakeholders.
Bottom-line, we think ReverseLogix can help companies save money, boost customer satisfaction, and reduce waste. For a company that handles physical products and plays in e-commerce, such as 3PLs, ReverseLogix typically adds 5% to net revenue and 15-25% to customer satisfaction. So, if you know a company that might like to benefit from returns management, feel free to reach out!
What is Dubai’s rapidly growing World Logistics Passport?
Nations from across Asia, Africa and South and Central America are lining up to join World Logistics Passport, a new trading programme launched under the directive of Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE, and ruler of Dubai.
But what is the initiative and why have companies like Sony, Johnson and Johnson, UPS and Pfizer already signed up?
Launch of the World Logistics Passport
The World Logistics Passport was launched in 2020 at the World Economic Forum in Davos, by Sheik Mohammed. It is aimed at increasing trade opportunities between emerging markets by combining the strengths of national trade organisations, logistics leaders and multinationals to from “a close knit alliance focused on trade growth”, according to Sheik Mohammed.
It hopes to supercharge supply chain development and bridge the gaps between manufacturing hubs that are expanding across emerging markets, particularly in South East Asia and Africa.
Brazil, Colombia, South Africa, India, Indonesia and Thailand were among the first nations to join the alliance in 2020. They have been joined in recent weeks by 10 further nations: Ethiopia, Botswana, Zimbabwe, Mozambique, Burkina Faso, Guinea, Malaysia, Kenya, Paraguay and Ecuador.
How does World Logistics Passport membership work?
The WLP is the world’s first freight loyalty scheme of its scale and type, and encourages local entities, freight forwarders and traders to provide additional trade in exchange for incentives. The initiative is split into a variety of tiers, which members join based upon criteria tied to their global influence and market leadership. They include silver, gold and platinum tiers, and members can unlock access to higher levels by meeting growth targets and outperforming the market.
Initial membership structure
- Global top trading companies - Identified by the WLP team, enjoy Platinum Tier benefits across all Hubs
- Selected top trading companies - At the Hub level, identified by the local benefit providers and the WLP team, are registered immediately at the Silver Tier in the first year
- Selected top trading companies - At the Gateway level, identified by the freight forwarders associations and the WLP team, are registered immediately at the Silver Tier in the closest Hub in the first year
- Other companies join the WLP at the White Tier and can be upgraded by up to one Tier per year by reaching trade growth targets in consecutive years
Dubai’s Silk Road strategy
The World Logistics Passport forms part of Dubai’s Silk Road strategy, a multi-decade endeavour launched in 2019 to promote and grow air and sea freight and bridge logistical gaps between emerging manufacturing and production hubs in emerging markets.
Earlier this year, Sheikh Mohammed said: “The World Logistics Passport is yet another major initiative that reflects the UAE’s vision to shape a brighter future for our world through innovative programmes that foster global trade cooperation.”
The group will today gather for the WLP Global Summit, the inaugural meeting for members. In a virtual live event, top speakers will share trends, welcome new members, and plot the future roadmap for the initiative. Lessons learned throughout the COVID-19 pandemic will be dissected, along with a vision for what the WLP will aim to accomplish over the coming 12 months.