The covid-19 pandemic has highlighted the importance of smoothly running global supply chains.
Closures of assembly and manufacturing plants have caused shortages of production inputs and finished goods. Meanwhile, groceries stores and pharmacies ran out of basic food staples and toilet paper.
These disruptions have shined a light on a need for technologies that could help avoid or reduce disruptions during future economic shocks, argues PitchBook in its recent report about supply chain tech.
Start-ups in the sector are involved in various aspects of procurement, inventory management, freight, warehousing, fulfillment and last-mile delivery.
In 2019, $11.5 billion in venture capital was invested in supply chain tech companies in North America and Europe, according to PitchBook.
While investment in the sector during the first quarter only amounted to $1 billion, several subsectors of supply chain tech are benefitting from the current economic environment and will likely see an increase in investment activity in the future, according to the report.
Risk management technologies that provide better visibility for tracking goods and components along the supply chain are expected to see an uptick in demand. Start-ups in this subsector include Munich, Germany-based Riskmethods and Milpitas, California-based Resilinc.
Automation technology for warehousing is another area of supply chain tech expected to see more interest from VC investors. During Q1, Berkshire Grey, a Lexington, Massachusetts-based materials handling automation system closed on a $263 million Series B led by SoftBank. And Waltham, Massachusetts-based Vecna Robotics announced a $50 million Series B led by Blackhorn Ventures.
Automation technology helps to make warehouses a safer place for humans to work during the pandemic. Additionally, as people are ordering more goods online and demanding faster delivery, enterprises are building small warehouses and fulfillment centers near urban areas. Since these centers cost more to operate, this could be a good opportunity for automation technology, the report argues.