Half a Dozen Rules for Investing in Early-Stage Supply Chain Technology — REFASHIOND Ventures

Introduction

Why is news about supply chains suddenly everywhere?

What is a Startup?

Rule #1: Do Your Homework

Rule #2: Think in Broad Categories

  • Data & Decision Analytics: Using data, information, and computational technologies to make better decisions in the face of uncertainty by harnessing the best of human creativity AND computational power.
  • Advanced Materials: Using advancements in computational technology AND materials science to reduce waste through the creation of circular, regenerative, and sustainable supply chains. And, applied research aimed at developing new materials with performance characteristics that can make the existing alternatives obsolete once production scales.
  • Advanced Manufacturing: Using advancements in computational technology AND materials science, manufacturing processes, and industrial engineering to shift towards manufacturing that fulfills actual demand AND away from manufacturing for anticipated or forecasted demand which may never actually materialize.
  • Next Generation Logistics: Using software and computational technology to improve how society manages the infrastructure, equipment, and networks that facilitate the storage, transportation, and distribution of physical goods AND in the process to reduce harmful emissions and waste, while making logistics businesses more sustainable.
  • First; Notice that there’s a large overlap between Data & Decision Analytics and the other three categories. This is because one source of the innovation happening in supply chains is around the use of computational technologies to solve problems through modeling and simulation before testing and implementing solutions in the real world.
  • Second; After this broad categorization, the next step could be to identify whether an innovation is tailored for a specific industry like agriculture or construction, or if it is an innovation that is intended to be broadly applicable across industry verticals. This matters because, as supply chain technology generalists we believe in partnering with other investors who may have deeper, more relevant and nuanced knowledge of industries like energy, healthcare, pharmaceuticals, and education — industries notorious for gnarly regulations and unique characteristics that are not obvious to outsiders.
  • Third; Data & Decision Analytics is as much about the capture, storage, security, transmission, and flow of information as it is about the flow of money and capital. In this discussion on Twitter , Ryan Petersen, CEO and Founder of Flexport, points out that “Goods are just money that has taken another form for a period of time until they are delivered.” Furthermore, in that same discussion, Rick Zullo, Cofounder and General Partner at Equal Ventures points out that, “Given supply chain delays and lean margin structure, timing/flow of funds ends up being mission critical to SURVIVAL, not just success.”
  • Fourth; Supply chains are about much more than logistics and transportation. Even though supply chains are the mechanisms and platforms that enable production, distribution, and consumption, many early-stage investors who describe themselves as supply chain technology investors often focus primarily on logistics and transportation. We believe this artificially narrows the scale and scope of the opportunity.

Rule #3: Identify What Form of Innovation is Most Likely To Succeed

Rule #4: Identify What Team Structure is Most Likely To Succeed

Rule #5: Identify If and How Invisible Barriers to Adoption May be Overcome

  • Product: The primary question here is, “Does the product work and does it solve an important and acute problem in a way that is relatively easy for customers to adopt?”
  • Customer: The primary question here is, “Is the value proposition and value exchange such that the presumed customer is willing to adopt, and pay for, the product?”
  • Sales: The primary question here is, “Does the team have a good idea how to identify, communicate with, and sell to the right individuals at the right target customer organizations?”

Rule #6: Think About Which Economic Moats Matter Most

CONCLUSION

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Early-stage VC — Supply Chain Tech. REFASHIOND. #TWSCF. NYUTandon. FreightWaves. | I’m not afraid to be different. Blog @ www.innovationfootprints.com.

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Brian Laung Aoaeh, CFA

Brian Laung Aoaeh, CFA

1.6K Followers

Early-stage VC — Supply Chain Tech. REFASHIOND. #TWSCF. NYUTandon. FreightWaves. | I’m not afraid to be different. Blog @ www.innovationfootprints.com.