As trade flows between Southeast Asia and the rest of the globe intensify, the region will naturally become the battleground for startups

Internet of Things, data analytics and Artificial Intelligence are enabling greater efficiency and more collaborative models in the US$4-trillion logistics industry, and it continues to grow exponentially as consumer expectations evolve. Incumbent players are re-evaluating business models and increasing investments into technology to ensure competitiveness, optimise effectiveness, and drive efficiencies.

As per an estimate, 50 per cent of large global companies will be using AI, advanced analytics or IoT in supply chain operations by 2023.

The newly-launched Reefknot Investments (a JV between Temasek Holdings and Kuehne + Nagel International Swiss transport and logistics company), is looking to cash in on this opportunity. The Singapore-based VC firm has just announced a US$50M fund, which will look to invest in tech-enabled logistics & supply chain startups, globally.

In this interview with e27, Reefknot’s MD Marc Dragon sheds lights on the global logistics space and the fund’s plans.

What prompted Temasek and Kuehne + Nagel to come together to launch Reefknot? What are the objectives of the fund? What is your investment philosophy?

While Reefknot Investments is a 50-50 joint venture from Temasek and Kuehne + Nagel, I can’t comment on the reasons for my two Limited Partners (LPs) to come together to launch Reefknot.

However, I can share that while the primary objective of the fund is financial in nature, the overarching objective is to identify and support startups with the potential to transform the supply chain and logistics industry.

Our investment philosophy is to invest in high-growth technology companies pushing new frontiers within the supply chain and logistics space. Beyond the pure financial investment, we further leverage our ecosystem of partners to support our portfolio companies with the necessary domain or technical expertise.

Also Read: Temasek teams up with Swiss firm to launch a US$50M logistics fund in Singapore

Our platform provides founders access to the business insights of Temasek, the logistics and supply chain expertise of Kuehne + Nagel, and an ecosystem of high-value partners who will bring added support to help accelerate the startup’s business growth.

We are very selective about the startups that we shortlist, first and foremost of which is if their core technologies and/or business model are truly differentiated, and we have line of sight of potential industry impact. The founder or founding team is also highly important for us, and we would need to have confidence in their ability to bring their business to the level we jointly aspire them to.

Startups see us as an active strategic investor, and we aspire to support our highly-curated portfolio companies with whatever means we have at our disposal.

Can you share the names of your other LPs?

As of now, Temasek and Kuehne + Nagel are our only two LPs.

Will the fund invest only in supply chain & logistics companies? Which other verticals and geographies will you target?

The realm of supply chain and logistics is vast, and within that, we are specifically targeting several solution areas, including AI/deeptech, digital logistics, and trade finance.

As this is a global fund, there are more than sufficient opportunities in this space, and we are confident that our unique focused proposition, puts us in a very strong position globally to not only identify to invest in the select transformational startups, but also to provide the necessary financial, domain, and business development support for these startups.

What opportunities do you see in Singapore and in Southeast Asia?

The global supply chain & logistics industry is on the cusp of transformation, and Southeast Asia (SEA) is very much at the forefront of this. Also, the rise of the consumer class in SEA will be a significant factor with e-commerce projected to grow by 32 per cent to almost US$90 billion by 2025. As trade flows between Southeast Asia and the rest of the globe intensify, the region will naturally and increasingly become the battleground for both global startups, as well as incumbent companies in this space.

Singapore, with its strategic location and reputation as a world-class logistics and financial hub, will likely play a key regional-centric role in facilitating opportunities for companies seeking to shape this future by leveraging on new technologies and business models. That being said, it would be necessary for startups to adopt the ‘glocalisation’ mode of design and thinking, which includes the localisation of such technologies and business models within the individual Southeast Asian countries as well.

While there are quite a few funds in the region, there has been a slight decline in terms of fund deployment because there is speculation that VCs are just waiting for the impending economic recession to happen. What is your view?

We are investing for the medium to long term, and while we take into consideration the risks associated with the macro-economic climate as part of our commercial and financial analysis for each shortlisted company, we will invest if the opportunity fulfills our primary criteria.

Some others think that there aren’t that many good companies to back in Southeast Asia…

We have had multiple interactions with various startups within Southeast Asia, and I can say with certainty that many have the ability to grow, win, and potentially dominate within Southeast Asia. There are a select few that have their eyes on Asia and beyond, and if well supported, have the potential to compete with the world’s best.

Do you think the rise of super apps and decacorns in the region has limited the chances of budding startups?

Many super apps and decacorns work very closely with niche startups. These ecosystems can be symbiotic in nature, and can potentially nurture startups within their umbrellas.

In addition, each startup has its own DNA and potential for growth. Some have the potential to be the next unicorn, and some might be acquired by the said unicorn/decacorn.

That being said, the interplay between the specific solution area the startup is focusing in, their core technologies and business models, the capabilities of the founders, as well as the capabilities of their supporting ecosystem have much to do on how large or successful they will be.

As the supply chain & logistics industry faces a period of unprecedented change driven by digitalisation and evolving customer expectations, why the market needs someone like Reefknot Investments?

There are few funds globally that specifically focus on investing and nurturing especially Series A/B supply chain and logistics technology startups.

From our engagements in the industry, there are typically three areas that startups see us of value — the knowledge and know-how of the supply chain & logistics industry, the understanding of new and upcoming technologies and their applications to the industry, and finally, we are active investors that support the startups/founders.

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We will use this focus to our advantage, to not only curate and actively support potentially industry transformational startups, but we expect to also contribute to the broader ecosystems that we are involved in through a global think-tank initiative.

How Reefknot will consolidate and leverage an ecosystem of high-value partners to bring added support and help accelerate business growth?

The world is facing explosive global technology developments and growth, especially in emerging economies and cities in the Asia Pacific. Companies across global value chains are increasingly re-evaluating business models and investing in technology to optimise the capture of demand and improve cost and operational efficiencies.

This trend drives our initiative — which is to launch a think-tank that is not only looking to synergise new business models and technologies, but also create a community of industry experts to support and sustain the growth in the logistics and supply chain space.

The post Startups should adopt the glocalisation mode of design and thinking: Reefknot Investments’s Marc Dragon appeared first on e27.