Dynamo Dispatch (02/21/22)

Issue 183 | Factored Quality, Haul, Volta Trucks

Dynamo Dispatch. Weekly update from Dynamo Ventures covering the latest and greatest in supply chain, mobility, and building venture-scale businesses.

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Weekly Commentary 💭

Three portfolio company raises in three consecutive weeks? Yes, please. Congrats to the Factored Quality team! 

Be sure to check out last week’s Future of Supply Chain podcast episode in case you missed it. Santosh sat down with Chris Stallman of Fontinalis to talk about investing in supply chain and mobility startups. Note for founders: skip ahead to 27:42 for some great advice about customer acquisition. 

We Are Dynamo,

Clay, Santosh, Jon, and the rest of the Dynamo team

Note: please add “dynamo@substack.com” to your email client, so you don’t miss future issues due to aggressive spam filters.

Supply Chain 📦

Supply Chain Technologies Developed to Help Companies Thrive. Supply chains across the globe are finally getting the attention they desperately needed before COVID even hit. “Investment in tech-focused supply-chain companies [has exploded - totaling $24.3B] in the first nine months of last year, almost 60% higher than the total for all of 2020.” Founders are addressing simple, yet critical problems that have been holding back the industry for way too long. For more, check out  What Makes A Truly Agile and Resilient Supply Chain?.

73% Of Warehouse Operators Can’t Find Enough Labor, Up From 26% In 2021. According to a new survey from Instawork, 75% of light industrial businesses don’t feel fully prepared for 2022, and 60% struggled to keep pace with increased demand last year. The State of Warehouse Labor report found that 58% of businesses saw an increase in fulfillment volume over the past 12 months. Conversely, while retail sales and business inventory levels have remained strong, warehouse jobs increased by only ~9% y/y in January to 1.73M jobs. Although workers’ requests and variability in volumes are driving warehouses to temporary labor, only 44% of operators are investing in flexible scheduling options and career development paths. Separately, recently published Research Explains Warehouse Workers’ Sentiment On Automation and Investors Seek More Information About Companies’ Struggles to Hire.

European Hub Congestion Causing ‘Operational Chaos’. Longer waiting times for feeder and short-sea vessels are slowing the turnaround of ships and equipment, with the bottlenecks spreading to smaller ports within the regional network. The main cause of these long waits is poor schedule reliability from larger vessels demanding greater hub-and-spoke services and the deployment of additional regional capacity. Additionally, ship arrival times worsened through 2021 as congestion built up at ports on both ends of the Asia-North Europe trade lane. Persistently late arrivals have resulted in carriers omitting ports and shortening port rotations in a struggle to restore at least some schedule reliability, disrupting the onward transportation of containers. On a positive note, Ports Of LA And Long Beach Set January Records As They Clear Containers and Port Houston Sees A 1,874% Y/Y Increase In Steel Cargo.

New-Container Prices And Production Finally Peak. The consolidated container manufacturing industry in China built 130% more TEUs in 2021 than in 2020, reaching a new record of 7.2M. Despite the recent record surge in prices (~$4K per TEU for newly built containers which is double the historical norm), both the factory output and the price of new containers are pulling back. According to the largest box equipment lessors in the world, new container prices have fallen to $3.4K per TEU; while the pricing of new boxes is down from its peak, pricing of used containers in the resale market haven’t decreased. Despite ‘Five Eyes’ Nations Launching A Global Supply Chain Probe with hopes to normalize market dynamics, there’s still a concern that a New Wave Of Contracts Are Expected To Lock In Substantially Higher Shipping Rates.

Autonomous Vehicles Make Inroads — Inside And Outside The Warehouse. According to the 2021 MHI Annual Industry Report, 21% of the more than 1K supply chain and manufacturing leaders surveyed said they plan to invest in AV and drone technology in the next three years. Moreover, 20% of respondents said their companies have AVs and drones in use today, while 37% predicted they would be in use within the next five years. On the other hand, a general unease about autonomous vehicles and drones can hold back technology adoption, even if it's not a conscious sentiment. Despite consumer sentiment, that hasn’t stopped partnerships such as DHL and TuSimple or CH Robinson and Waymo from increasingly pushing for the implementation of AVs. 

Truckload Rate Inflation Suggests That Service Was Extremely Undervalued By Shippers. Although low barriers to entry in transportation have led to historical oversupplies, capacity has been largely taken for granted over the past two decades. While contract rates for dry van truckload have increased roughly 25% over the past year, carrier compliance rates for accepting electronic requests for capacity have only improved ~5%. Arguably, shippers had been underpaying for transportation costs before the pandemic regarding the value of service provided, and the probabilities of the current capacity shortage being resolved from the supply side alone are slim. On other news in the trucking industry, The 2021 Driver Recruiting And Retention Annual Report Found That Equipment Is The Most Important Issue To Drivers and January Trailer Orders Sync To Bulging Backlogs. 

🌟Returns Are Causing A Holiday Hangover For Retailers. While the winter holiday season ended over a month ago for consumers, retailers are still in the thick of it, contending with a mountain of product returns the likes of which they’ve never seen. According to a report from the National Retail Federation, US consumers will return about $158B worth of goods purchased between November 1st and December 24th, increasing ~56% y/y. Despite supply chain disruptions and other pandemic-related challenges, holiday retail sales in 2021 reached a record-high ~$887B, but the NRF estimates that 18% of those purchases will be returned, up from 13% in 2020. On top of the current backlog, concerns increased following an Unexpected 3.8% Surge In January Retail Sales while More Americans Than Ever Use Online Grocery Services.

Mobility 🚗

Tesla Opens Superchargers to Third-Parties in Europe. Tesla made all of its superchargers in the Netherlands compatible with other EVs and have other pilot programs in neighboring European countries in the pipeline. This is good news for the long-term growth of the EV industry as charging compatibility becomes mainstream. If this trial works out for Tesla we could see similar steps taken in the US. For related news, check out Home EV Charging Spend Will Exceed $16B Globally by 2026.

Small US Cities Fighting To Retain Airlines. It’s safe to say that the city of Stillwater, Oklahoma State University, and the University of Oklahoma are desperate after paying American Airlines $4M to keep normal plane routes intact. High fuel prices, low demand, and pilot shortages have caused many airlines to suspend flying to small cities all around the US. This is yet another spillover effect from the pandemic and signals that the industry could be ripe for disruption as many communities will be left without long-distance mobility options. For related information, check out Joby Aviation Partners with Japanese Airline To Launch Air Taxi Service.

Ford, Volvo Join Redwood Materials To Launch Free Ev Battery Recycling Program In California. Redwood Materials will work with dealers and dismantlers to recover batteries. The cost of retrieving and transporting batteries will be shared by Redwood Materials and its partners. The long-term goal for this type of recycling is to create a closed-loop supply chain to offset the overall costs of batteries. In related news, check out Audi Joint Venture In China Approved For $3.3B EV Factory and Tesla Launches New Automatic Electric Trunk for Model 3, Upgrade Available at Official Service Centers. 

🌟Burning Electric-Vehicle Batteries Complicate Efforts to Fight Fire on Drifting Ship in Atlantic Ocean. Over 4K vehicles were aboard the Felicity Ace, which caught fire off the coast of Portugal midway through last week. Insurers estimate a potential loss that could total over $100M since a good portion of the carried cargo are luxury cars. Don’t be surprised if questions concerning the transportation of EVs across open seas begin to surface. 

Tesla’s ‘Phantom Braking’ Problem Is Now Being Investigated By The US Government. The National Highway Traffic Safety Administration (NHTSA) is investigating 416K Teslas after getting hundreds of complaints of phantom breaking. The NHTSA has reportedly gotten 354 complaints in the last 9 months which has seen Tesla issue 10 recalls since October. This range of problems is drawing concerns from safety advocates for testing unfinished products on consumers. This string of recalls could dampen public perception of AVs and EVs, forcing manufacturers to heavily scrutinize any autonomous or semi-autonomous features they might employ in the future. In other news, Tesla Sued Over Model 3 Suspension Failure that Allegedly Caused a Deadly Crash and GM Plans to Restart Chevy Bolt EV Production April 4, As Recall Battery Replacements Continue.

Ford Considering Return To India To Build EVs For Export Markets. Hey India, guess who is back? Ford. Six months ago, following over 2B in market losses, Ford stopped producing cars in India. The drawing factor behind the possible turnaround is a potential government subsidy as Ford has gained approval from the Indian government to seek public funding. Ford has pledged to invest 30B in EVs and batteries through 2030 as a part of its global EV strategy, this is another step in that plan. In related news, VW Planning New EV Factory, Increase In Output and Ford Makes It Easier To 3D-Print Accessories For Its Maverick Pickup.

Smart Adaptive Headlights are Finally Coming to the US. The National Highway and Traffic Safety Administration (NHTSA) announced that they’re allowing automakers to add Adaptive Driving Beams (ADB) - a “headlight technology with automated beamforming, controlled by a computer that aims lights in different directions.” Headlight technology in the US has fallen behind global competitors due to old regulations prohibiting automakers from implementing ADBs. As drivers become more used to having less and less work to do when controlling their vehicles it opens the door for AVs in the future to be a desirable alternative. For other news, check out This Super-Realistic Virtual World is a Driving School for AI and Autonomous Vehicles And Their Impact On The Economy.

GM Seeks Permission to Deploy AVs. GM-backed AV company Cruise has submitted a petition in order to operate some of its AV designs with limited manual control features like the Cruise Origin which doesn’t have a steering wheel. National AV regulation in general has stalled, which means Cruise could be fighting an uphill battle in getting clearance for many of its designs. Automakers might have to continue to model AVs with conventional designs despite varying levels of need for different traditional features. In related news, GM-Backed Cruise Opens Up First Driverless Rides to Public in this US city.

Fundraises and M&A 💸

💥 Factored Quality Raises $5.6M Led By Amity Ventures. Factored Quality is building a digital quality control platform that helps global CPG brands manage their quality control and factory audits. Today, close to a hundred of the worlds’ top eComm & CPG brands are leveraging Factored Quality’s global quality control network. Additional investors include Dynamo Ventures, BAM Ventures, and Red Antler. 

Liefergrün Raises €3M Led By Speedinvest. Liefergrün is a zero-emission last-mile delivery service for retailers in Europe. The company estimates that their service generates only 180g of carbon per delivery, thus eliminating 420g from the current standard. The funds will be used to grow its team and expand its service.

Freterium Raises $4M Led By Partech. Freterium is a cloud-based transport management platform for manufacturers, retailers, and logistics firms to manage their daily road freight shipments. In its first full year since launch, Freterium onboarded 20+ enterprise customers, growing 35% m/m. The funds will be used to invest in the company’s R&D, grow its team, market its software, and expand across Egypt, Saudi Arabia and the UAE.

Kiwibot Raises $7.5M Pre-Series A. Kiwibot is a robotic sidewalk last-mile delivery startup. They recently announced an expanded contract with Sodexo, which will enable Kiwibot to expand its robotic fleet across 50 US college campuses by the end of 2022. The funds will be used to further develop their technology and expand across multiple college campuses and cities.

DIMO Raises $9M Funding Round. DIMO is a user-owned IoT platform that allows users to maximize the value of their connected devices, starting with cars. Investors include CoinFund, Variant Fund, Slow Ventures, Table Management (Bill Ackman), Wonder Ventures, Streamr, Stratos Technologies, and Lattice. The funds will be used to further develop its infrastructure and decentralize the project to facilitate governance by drivers, public and private fleets, and app developers.

Overview Raises $10M Led By Blumberg Capital. Overview utilizes computer vision to help customers identify manufacturing defects on the production line. Additional investors include GV, Momenta, and Bain Capital. An expanding number of startups offer computer vision products targeted at manufacturing, including Landing AI, Cogniac, and Roboflow.

Haul Raises $10M Led By B Capital Group. Haul is developing a marketplace that provides trucking companies with a pool of vetted, on-demand truck drivers to operate their trucks. Since its initial $3M seed financing last year, Haul’s revenue has grown 30% m/m. The funds will be used to expand its workforce and current service area beyond several markets in California.

Anvyl Raises $15M Led By B Capital Group. Anvyl is a SaaS-based supplier relationship management platform which unifies and streamlines supply chain communication and processes. Additional investors include AlleyCorp, Company Ventures, First Round Capital, RedPoint Ventures, Flexport, and Buckley Ventures. The funds will be used to grow its engineering, ML, design, and product team.

RideCo Raises $15.8M Led By Eclipse Ventures. RideCo is a Canadian company offering cities on-demand transit tech. RideCo has found its way into cities across the US and Canada, from big cities like Calgary and Houston to small towns like Cobourg, Ontario. The funds will be used to grow its engineering, customer service, sales, and marketing team.

Mundi Raises $16M Led By Union Square Ventures. Mundi is a financial services platform for cross-border trade. The raise comes after Mundi secured a $100M warehouse line from Silicon Valley Bank. The funds will be used for launching new products, growing its team, and customer acquisition and retention. 

UFODRIVE Raises $19M Co-led By Hertz and Certares. UFODRIVE is a car rental service using only electric fleets. The company currently operates in 18 locations globally including Luxembourg, London, Brussels and Dublin. The funds will be used to accelerate product development and expand globally, with a focus on the US market.

Coast Raises $27.5M Co-led By Accel and Insight Partners. Coast helps companies control fuel and fleet spending with its expense management software. Additional investors include Avid Ventures, Better Tomorrow Ventures, BoxGroup, Flexport, The Fintech Fund, and angel investors such as Affirm’s Max Levchin and Plaid’s William Hockey. The funds will be used to expand its team, product line, and existing footprint with businesses in the US.

SourceDay Raises $31.5M Led By Norwest Venture Partners. SourceDay helps manufacturers automate purchase order (PO) changes and enables supplier collaboration. Since 2019, SourceDay has managed over 7.3M PO changes for manufacturers, suppliers, and distributors across the globe. The funds will be used to grow its team.

Convictional Raises $40M Series B led by YC Continuity. In the past, retailers uploaded their drop-ship, marketplace, and wholesale suppliers using electronic data interchange (EDI) which is very time consuming. Convictional reduces the whole process down through a one-click integration. Additional investors include Lachy Groom, that led the prior rounds, and FundersClub.

Motorq Raises $40M Led By Insight Partners. Motorq enables fleet management companies to leverage data and actionable insights from the fragmented set of built-in and aftermarket advanced connected-car systems. They have established relationships with the top 10 global automotive leaders enabling them to securely provision information from more than 51M vehicles. The funds will be used to advance product development, increase collaboration with automotive OEMs, establish sales and business development in Europe and Japan, and enhance the core Motorq platform for new markets.

TruKKer Raises $96M Co-led By ADQ and Saudi Technology Ventures. TruKKer is a technology enabled truck aggregator that operates multiple truck types for multiple end markets in the Arab peninsula. They currently serve over 700 enterprises and boast a fleet of more than 40K trucks. The funds will be used to accelerate new product launches and bolster the company's presence in its existing markets across the Middle East and Central Asia.

Veho Raises $170M Led By Tiger Global. Veho is a next-day parcel delivery platform. Additional investors include Softbank Vision Fund II, General Catalyst, Bling Capital, Construct Capital, Industry Ventures, Origin Ventures, The Chainsmokers’ Mantis VC Fund, and the founders and CEOs of Allbirds, Everlane, FIGS, Harry’s, Flexport and Warby Parker. The funds will be used to grow its team, accelerate growth, and advance their technology infrastructure.

CelLink Raises $250M Led By Whale Rock Capital. CelLink builds intelligent wiring systems that minimize complexity and weight for EVs. Strategic investors include BMW iVentures, Lear Corp, Robert Bosch Venture Capital, and 3M. The funds will be used to build a factory in Georgetown, Texas to scale its production.

Volta Trucks Raises $260M Led By Luxor Capital. Volta Trucks build electric trucks for sustainable cities. Prototypes of the Volta Zero, a 16-tonne fully-electric truck, will be delivered to customers in mid-2022, with production due to start in late 2022. The funds will also be used to develop their 7.5-tonne and 12-tonne electric trucks.

J&T Express Raises $2B Funding Round. J&T provides express delivery and cross-border logistics services. Investors include Temasek, Hillhouse Capital, Boyu Capital, and Sequoia Capital China. The funds will be used to support the expansion of its global delivery network and cross-border businesses, and to digitize its warehouse centers and business operations.

Mileway Raises $24B Led By Blackstone. Mileway is the biggest operator of urban warehouses in Europe. Blackstone launched Mileway in 2019 to operate over 1K logistics assets the private equity firm has bought. Existing investors in Mileway have been offered a chance to retain or increase their shareholding or exit for cash.

Cogo Acquires eScoot. Cogo gathers all shared rides in one app, as long as they are human or electric-powered. With this acquisition of eScoot, Cogo expects an immediate boost to its expansion plans in key European markets such as Germany, France and the UK, accelerating user growth outside its current footholds in Southern Europe and the Nordics. The terms of the deal were not disclosed.

Shiprocket Acquires Glaucus Supply Chain Solutions. Shiprocket is an eComm shipping platform that enables cost-effective shipping for direct-to-consumer retailers. The acquisition will enable the two platforms to combine their solutions to take the complexity out of fulfillment challenges faced by traders, retailers and brands. The terms of the deal were not disclosed.

Company Building 🛠️

YC: Things That Don't Scale - Software Edition. Hacks and approaches that companies used to get their software out in the market as fast as possible to find product/market fit. While this might seem unintuitive, several companies have launched using these tactics including Gmail, Facebook, and Twitch!

34 Product Lessons from Experts. A master list from hiring, to doing the job, and leadership activities. In working with seed startups, we’ve seen #21 and #24 being pitfalls founders fall into. As investors, you’ll see us embrace #33 in the way we build our firm and support founders.

Avoiding Distractions. We talk about focus at Dynamo and it’s hard to do in a world with increasing levels of connectivity, notifications, and other external triggers. Nir breaks down some strategies that can help one stay focused and productivity in this digital world.

Who's Hiring? 👩‍💻

Machine Learning Engineer at Stord in Atlanta, GA (remote ok).

Content Marketing Coordinator at Milk Moovement in Halifax, Nova Scotia (remote ok).

Senior Software Developer at Token Transit in San Fransisco, CA (remote ok).

💥 Have you seen any interesting startups recently? Introduce us.
❤️ We would love your support. Please forward to friends and share on social media.
🗞️ If you were forwarded this and found it interesting, please sign up.
🎙 Check out Dynamo's podcast series, The Future of Supply Chain.