Supply Chain Now Episode 397
The ‘TECHquila Sunrise’ Series on Supply Chain Now shares the latest investments, acquisitions, innovations, and glorious implosions in Supply Chain Tech every week. If you are looking for a podcast about ‘so-and-so signed a contract with such and such,’ or ‘they just released version 20 of that same technology you didn’t buy last year,’ this is the wrong podcast for you. But if you are looking for real news and innovation, welcome to the Sunrise.
In this episode of ‘TECHquila Sunrise,’ Supply Chain Now Host Greg White discusses recent articles on the following topics:
· Venture Capital 101: stages of investment and valuation, inclusive investment
· How COVID-19 changed the venture capital investment landscape in the U.S.
· Deal updates: TuSimple backed by UPS: driving into the future of autonomous truck tech with a trailer load of capital and a convoy of Fortune 100 partners and customers
Greg White (00:01):
Hey this week at tequila sunrise, we’re mixing up the format a bit. First. We’re starting on Thursday and this week I’ll teach you some of the basics of venture investment. Like what is an a round anyway, we’ll share some guidance for investors from an insightful VC founder on how to get inclusive investing, right? And we’re going to highlight one company that is driving into the future of autonomous truck tech with a trailer load of capital and a convoy of fortune 100 partners and customers all that. And this week steel updates. So you better listen up. It’s time to wake up to tequila, sunrise, where without the aid of tequila, somehow in toxicants of any kind or even coffee, we opened your eyes to how venture investing ticks along with the notable investments, acquisitions innovations, and those inevitable implosions that are focused on supply chain tech every single week at this fun, Holy hour of the day, if you want to know how investment is done, who’s winning who’s waning, who’s whining and who to track and supply chain tech. Join us
Greg White (01:30):
Every single Thursday for another builiding tequila, sunrise. Hey, Greg white with supply chain. Now here always happy, never satisfied, willing to acknowledge reality, but refusing to be bound by it. My goal is to inform, enlighten and inspire you in your own supply chain tech journey. Hey, check this out. This episode is brought to you by Cooper venture capital, my friends, biology, James and Cena. You might remember we talked about Cobra in the first tequila sunrise episode, and I’ve known this team for about a year now. They’re early stage investors for companies that are, re-imagining how we work and live building emerging technologies for future of work industry 4.0 and yes, supply chain. We’ve worked together investing and advising at procurement tech startup Verisign right here in Atlanta. And we just really hit it off. When we talked about their visionary investment philosophy, it’s a refreshing contrast to a lot of VCs.
Greg White (02:37):
And as a serial founder, I really appreciated that if you think you’ve got something worth investment, shoot me your executive summary or pitch deck on LinkedIn. And we’ll see about getting you connected or reach out firstname.lastname@example.org. That’s K U B E R a.vc. Okay. I’ll include the link to any articles referenced in the show notes and an accompanying blog on supply chain. Now radio.com, if you like this series say so, and don’t forget to subscribe at supply chain now, radio.com or wherever you get your podcasts, specially Spotify will let me know how I can make this more valuable. And in fact, this week I’m incorporating some investing guidance, tips, and understandings from some feedback I got from some valuable listeners. Thanks Fred. Hey, we’ve been talking the last couple of weeks about things like seed investment, a rounds and other investment terms like that. I keep getting the feedback that people want education on what all this stuff means.
Greg White (03:40):
So we’re going to take this as a significant part of the show and just include it as part of the show. And we’ll build more depth over time as we plan this phase. So bear with us a little bit this week. We’re going to start simple and clarify what some of this means with some venture capital one Oh one. We’ll take a look from the perspective of the entrepreneur and startup founder. First let’s define what venture capital is and why it’s important. It’s important to understand that venture capital is for startups and it’s provided to companies typically with rapid high growth potential in exchange for ownership equity, by the investors in the company. This is not funding for a franchise or a service or family businesses as rule it’s guns, a blazing world, changing big ideas that require heady problem solving, complex marketing and sales and significant investment in solution development, which almost always means cloud software or hardware technology.
Greg White (04:45):
So let’s talk about a couple of things, definitions of stages of investing and valuation. So stages of investing define essentially where the company is. Think of it as your own investment often called bootstrapping or friends and family or angel investing. And in one of my companies, my angels were my three little angels in their college fund. Fortunately, we got them a good pay off. Then you move on to seed stage. So here you typically may not have a product. And then you’ll have, after the seed stage, an a round a starts at the beginning of the alphabet, it’s your first round of what’s typically post revenue or significant level of revenue. Let’s say around a million dollars of revenue, you will be eligible for an, a round B see-through H or Z. However many other rounds you get are just add on rounds that continue to put money into the business and give equity or sell equity to investors so that they’re participating in the business and continuing to fund the growth of sales, development, marketing, other operations of the organization.
Greg White (06:02):
Then you’ll move on to what’s a growth equity phase, and it’s at this point, and usually not before it’s at this point that the founders may actually get to take some, as we say, in the game chips off the table, meaning they will actually get a portion of the funding there. We’ll talk in more detail about that later. Then you move on as you get to be a bigger company, hundreds of millions of dollars in sales, into private equity, and that’s a whole nother game and worthy of its own show, frankly. So those are the foundational stages of investing. There are lots of nuances in there as in terms of when that investment may come or what the trigger points are. And we’ll go into more depth in a show about that specific aspect of investment. What else is important for our discussion today is valuation.
Greg White (06:52):
So what is valuation? Well, it’s simply how the company is valued. And typically a company is valued based on the experience of the founders, the revenue potential, the actual revenue, other momentum like partnerships or product stage and things like that. And that’s how somebody determines that your company is worth 1 million or $1 billion. There might be a few numbers in between there. And then that is your valuation prior to getting funding. So let’s say you are worth a million dollars and somebody puts a million dollars into you. Your valuation pre money before the million dollar check is 1 million valuation. Post money is 2 million. So that would make your investors about a 50% owner. We’ll talk about whether that’s a smart investment to take a whole later. So I hope that that’s helpful as a starter. I know that’s a lot. Maybe you rewind and you listen to this segment a little bit more.
Greg White (07:56):
And of course, if you ever have any questions, you can always shoot me a note. Now with that learning under our belt, let’s get to this. Week’s interesting insights for this week of July 6th, the start of the second half of the year, it’s all downhill from here. This first discussion is for you. If you have a tech startup are considering founding one, you’re an investor, or even just a curious observer. Last week, we talked about cities around the world with the top startup ecosystem. So if you miss that, go have a listen. This week, we’re talking about how COVID-19 changed the VC venture capital investment landscape in the U S in late January, when COVID was still a sidebar story, experts were telling us not to go to China, nothing initially was said, or thought of people coming from China, this among other perspectives and realities is how the world has changed.
Greg White (08:49):
And of course the effect at that time on the economy and investment in companies was not known, but around mid-March when the States abruptly sent people home and virtually ceased commerce, things changed dramatically. This analysis starts with that timeframe. And the three months that followed and shares the impact on investing, there were a significant number of deals, 541 made from mid March to mid June, but still that’s down 44% from the same period. Last year, the biggest impact was on seed stage deals that dropped almost 60%. The good news is that while investment was harder to get check sizes, didn’t change from last year when an investment was made, it was made for about the same amount as, as previously, this did very significantly. All of these numbers based on industry travel tech took the biggest hit of all and cannabis tech, where supply chain is a significant issue with compliance and provenance regulation, but instability of the big players and some bad actors have hampered industry growth.
Greg White (09:59):
They’re still, there are companies succeeding. One that I work with flourish is doing quite well in the industry and taking business off of competitors. The upshot of the lockdown is that investors couldn’t travel to meet founders. And while some investors may invest sight unseen, it’s very rare at the same time, entrepreneurs and investors are adapting rapidly and finding new ways to be present in markets, outside their local area, by doing things like engaging venture partners. Oh, there’s another term. Think of venture partners as contractors that help evaluate and select potential investments. Part-time partners, even in this difficult environment, though, there are segments that are growing e-commerce data, privacy and harmonization, future of work with the changes that are going on with how and where people are working industry 4.0 that we’ve been hearing about for a long time and supply chain. Look, those that adapt will succeed in spite of, and often because of this new world, fear not, this is a fun one and will be a controversial one with some of the people in the supply chain industry, too simple to use simple six, $250 million in plans and autonomous truck network backed by ups.
Greg White (11:26):
First off, this company has 298 million in investment and is conducting revenue generating transport for over a dozen customers, including some fortune 100 they’ll increase from 50 runs per week that they’re already doing to 93 per week using 40 trucks in pretty short order. But before we talk about more advancements, let’s face a few facts here, look, this topic will be a bit controversial. And I know that there are many who would like to deny the approaching autonomous revolution, but I’ll share why I believe these dynamics make it inevitable. If not immediate look e-commerce will require more ground movement of goods than ever before. Secondly, safety and hours of service remain big issues for transportation and difficult to resolve. And additionally, incoming generations are not inclined to become truck drivers and drivers shortage has been an ongoing issue in high capacity market conditions. The market momentum is there.
Greg White (12:30):
Market and labor conditions are ripe. And two simple Aurora Waymo and established shippers and carriers are investing big time. So let’s talk about what is happening to simple outline the launch of what it’s calling the world’s first autonomous freight network. They see this as unique in partnership with ups Penske, U S express and McClain two simple plans to establish an ecosystem of autonomous trucks complimented by digitally mapped routes, strategically placed terminals and a monitoring system dubbed to simple connect. The company claims this network is the safest and most efficient way to bring atonomous to market. And it’s going to roll it out in three phases to be operating in 48 States by 2023, then they’ll move to Asia and Europe. If you’re wondering about precision decision-making and economy to simple says they can deliver three centimeter precision, that’s just under an inch and a quarter, day night.
Greg White (13:36):
And even in inclement weather trucks are able to monitor traffic flow far enough ahead to not only provide increased safety, but also reduced fuel consumption by 15% and transportation costs by 30%. And remember, these vehicles can run without hours of service restrictions so they can run all night demand for autonomous as strong as the overall benefit to trucking is $70 billion. While increasing productivity, 30% to simple has a ton of competition, too many to name them all here. We’ve named a few of them, but they’re well invested, operating through influential partnerships. We just talked about and responding to significant market demand. Billions of people see the future coming in. These are all key elements of success. We will have autonomous. It’s just a matter of when and who will make it happen. Get ready. Hey, there’s even more detail around this fast mover. And there’s an article in venture beat.
Greg White (14:40):
I’m going to put in the show notes. If you want to get into the real detail, have a look. Hey, last episode, we teased this discussion around the C’s can enable inclusive investing into their model. We’ve talked in every tequila, sunrise episode about the need for investors to be more intentional and effective at delivering on the inclusive and investment promise. And this is a great guide. So let’s talk about how so BLC K VC, cofounder Sydney Sykes talked with tech crunch about some specific actions firms can take to be more inclusive. I’m not going to quote the article here, but I’m going to interpret and condense some of what she said. I think this is really important and well thought out guidance for VCs to get engaged. We’ve talked in every episode about the ills of investing and how far off the Mark investors are in finding diverse teams and how that makes it difficult for them to engage in inclusive investing.
Greg White (15:43):
Let me surface a couple of metrics just to fresh in everyone’s mind. Only 2% of all partner-level VCs are black and 81% of VC firms don’t have a single black partner to help firms this VC co-chair Sydney Sykes has delivered a pretty concise strategy to help firms be the change I’m going to number her suggestions I’m providing, as I said, my interpretation. So Sydney, if you’re listening, feel free to tell me if I’m off base on any of these. So first off don’t put the onus on people of color to enable or enact the change everyone needs to be bought in, right from the top and actively engaged track your firm’s state of diversity and be aware of the scale of any issues at your firm, but still it’s not about the numbers. It’s about recognizing the value that a diverse team adds and seeking it out.
Greg White (16:41):
Thirdly, understand not only your numbers of diversity, but also the seniority level of diversity groups in your firm consider general partners, limited partners, your speakers, panelists entrepreneurs, and more, and make sure you’ve got adequate representation at every level, recognize fourthly that your firm must lead top 10 firms do a very large portion of the investing. So it’s important that they embrace diversity to assure real change. We can’t simply enable firms that focus on investing in diverse founders and expect any real change to occur, expand your personal network and therefore your deal pipeline with diverse founders. There’s no need for a separate fund. As I said earlier, just an intentional will to create outreach and discover diverse talent. Lots of firms are worried about looking opportunistic or performative to avoid that. Be aware that a personal change of perspective is likely required your personal change, forget or charitable notions, engage, nurture challenge, and advise your diverse partners as you would your familiar associates be aware and intentionally diligent in assessing your own perspective and actions.
Greg White (18:04):
I can’t really do this topic full justice. I just wanted to share a little bit of something so that hopefully it gets people started. There’s a discussion with Sydney on tech crunch, extra live. So I’m sharing the YouTube link to that in the show notes, keep an eye out for more information on inclusive investing initiatives and be on the lookout soon for my tracker on inclusive fundings. On that note, let’s talk about some of the notable deals getting done this week. First, let’s start with our deal ticker, even in this unstable business environment. As I said earlier, deals are getting done this week a bit impacted by the holiday. I guess people invested less and acquired more. So let’s take a look at the numbers. 188 funding rounds for 3.2 billion that compares to two 45 and 29.3 billion last week, but 99 acquisitions for 19.6 billion
Greg White (19:04):
Versus 89 and 10.2 billion last week. I think last week I might have even said only 4.1 billion for the acquisitions for the previous week. So numbers are going up and it looks like acquisition market is getting hot. We kind of expected this coming into this crisis that some companies would need to get funding, of course. And in the absence of that, seek and acquisition, some pretty notable supply chain deals this week. Uber announced it as reached an agreement with Postmates to acquire this on demand delivery company for about 2.6, 5 billion in an all stock transaction. The deal will marry Uber’s rides and eats platform with Postmates us delivery business. However, Uber says it also plans to keep the Postmates app running separately. Indian company bulk MRO has secured a three point $3 million debt round from stride ventures. This Mumbai based technology platform enables the indirect supply chain procurement and has more than 5,000 brands and 1.5 million products on its platform and includes operations in the U S
Speaker 3 (20:17):
Greg White (20:17):
You STO a Mexico city based delivery, only grocery store chain. That’s an interesting concept, raised another $12 million in financing as it looks to expand its dark store format across the country, despite COVID-19 dramatically accelerating the curve of adoption for e-commerce. The penetration rate of each grocers is still less than 1% in Latin America. So there is a ton of upside opportunity there. Another Indian company zit work, uh, B2B marketplace for custom manufactured goods raised $21 million in its series C or third major. Remember funding round led by US-based green Oaks capital, along with participation from other existing investors like Accell Lightspeed and Sequoia India. This funding comes just six months after set work raised $32 million, which was co-led by Lightspeed and green Oaks and brings a total funding raised by the two year old company to around $62 million and roughly $242 million in valuation. Clearly they are doing something right or burning through a ton of cash.
Greg White (21:31):
All right, this brings us to our tequila sunrise supply chain tech stock index. That’s a mouthful. We’re making progress on the index. It’s a bit of work that more work than I estimated and along with advising providing content and just plain surviving, it’s taken me a bit more time than I expected bare with me. Still here is the list of companies I expect to introduce the index with Oracle SAP can access Aspen tech, Manhattan, associates, Coupa, Amazon, the cart, PTC park city group, SPS commerce, and a plan open text Corp, the biggest company you’ve never heard of. And Shopify I’d love to hear your thoughts on the stocks selected for the index, gimme additions or deletions from around the world. You think are meaningful in representing the supply chain tech index. All right, this has been a long one and I actually cut out some content here.
Greg White (22:29):
So that’s all you should need to know about supply chain tech for this week. Hey, give me some feedback and let me know how to change. This show have appreciated the feedback that I’ve gotten so far and done my best to employ it. I know there’s probably more that I can do and understand that we are still tweaking this format and we may even attempt a livestream version of this where you can actually participate. So don’t quote me on that, but it could happen. Hey, don’t forget to get to supply chain now, radio.com for more supply chain now series interviews and events. And every Monday here is live LinkedIn, Twitter, YouTube, Facebook, and Twitch for the top supply chain news on the buzz, every single Monday at noon with Scott Luton and me, and keep an eye out for a couple of new pilot series Jaman Alvidrez is going to have a transportation series and TechTalk yeah, like ticked up with the great Kirin versa and me for a deep dive on supply chain tech and how it impacts the supply chain.
Greg White (23:46):
Hey, if you’re listening and you haven’t subscribed, would you commit already subscribed to tequila, sunrise and supply chain. Now, wherever you get your podcasts, thanks for spending this time with me and remember acknowledge reality, but never be bound by it.
Would you rather watch the show in action? Watch as Greg brings TECHquila Sunrise to Supply Chain Now through our YouTube channel.
Greg White serves as Principle & Host at Supply Chain Now. Greg is a founder, CEO, board director and advisor in B2B technology with multiple successful exits. He recently joined Trefoil Advisory as a Partner to further their vision of stronger companies by delivering practical solutions to the highest-stakes challenges. Prior to Trefoil, Greg served as CEO at Curo, a field service management solution most notably used by Amazon to direct their fulfillment center deployment workforce. Greg is most known for founding Blue Ridge Solutions and served as President & CEO for the Gartner Magic Quadrant Leader of cloud-native supply chain applications that balance inventory with customer demand. Greg has also held leadership roles with Servigistics, and E3 Corporation, where he pioneered their cloud supply chain offering in 1998. In addition to his work at Supply Chain Now and Trefoil, rapidly-growing companies leverage Greg as an independent board director and advisor for his experience building disruptive B2B technology and supply chain companies widely recognized as industry leaders. He’s an insightful visionary who helps companies rapidly align vision, team, market, messaging, product, and intellectual property to accelerate value creation. Greg guides founders, investors and leadership teams to create breakthroughs that gain market exposure and momentum, and increase company esteem and valuation. Learn more about Trefoil Advisory: www.trefoiladvisory.com
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How COVID-19 Changed The VC Investment Landscape In The US:
TuSimple plans autonomous truck network backed by UPS:
Extra Crunch Live: Sydney Sykes on Fostering Diversity in VC:
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