A group of logistics entrepreneurs is launching a Silicon Valley-style accelerator for supply-chain technology startups, aiming to draw new investment and talent to the freight business.
The founders say they will run the Dynamo program alongside a $12 million logistics venture fund in Chattanooga, Tenn. The accelerator will have a $3 million budget raised from the fund and other partners to put toward startups focused on logistics-oriented technologies such as autonomous-truck operations, drones and software.
The startups will participate in a three-month program that will include testing their ideas with businesses in the Chattanooga area. The city has a growing manufacturing base, and is close to distribution hubs. FedEx Corp. and United Parcel Service Inc. both have major operations close to the region.
Tech-industry investors are showing greater interest in the logistics business. Amazon.com Inc. founder Jeff Bezos, eBay Inc. founder Pierre Omidyar and Uber Technologies Inc. co-founder Garrett Camp recently invested in Seattle-based freight-booking website Convoy. Last year, Founders Fund, backed by PayPal Holdings Inc. creator Peter Thiel, led a $20 million round of funding for freight-forwarding startup Flexport Inc., which offers online booking and tracking for cargo shipments.
Splashy startups such as DoorDash Inc. and Instacart Inc., focused on e-commerce and “last mile” delivery to urban consumers, have raised even larger sums.
The Dynamo backers hope their program will help attract top technology talent to the more industrial side of distribution, which has a reputation for being old-fashioned and resistant to change.
“Programmers right out of school are not wanting to get into this industry. Let’s be honest. They’d rather go work for Amazon, Facebook, or someone like that,” said Ted Alling, one of the program’s three founders.
Mr. Alling, Barry Large and Allan Davis started venture fund Lamp Post Group after selling their jointly owned logistics company, Access America Transport, to freight broker Coyote Logistics Inc. in 2014, a year before UPS bought Coyote.
The investors hope to attract people who “don’t want to create the next Instagram, or social network, but who want to do things that matter, who want to fix problems, who are ready to make some money,” said Mr. Alling.
As part of the Dynamo program, the teams will be part of an investor showcase hosted by Gary Vaynerchuk, a prominent angel investor and chief executive of VaynerMedia. Two to three will be selected for additional investment from the $12 million fund.
Silicon Valley “is a hugely ambitious and innovative location,” said Jon Bradford, a veteran of tech accelerator programs who will help manage Dynamo. But for industrial shipping, Chattanooga is where “the rubber meets the road, with the access to people, to the end customers,” Mr. Bradford said.
Chattanooga is home to a Volkswagen AG factory, and Tennessee has dozens of automobile-components makers serving plants in the region.
FedEx said last week it would invest $30 million in a second distribution center in the city. The package-delivery company also is sponsoring a logistics accelerator in Memphis, Tenn., run by EPIcenter, which will back work on technology in such areas as e-commerce, fleet efficiency and robotics.
By Wall Street Journal | March 29, 2016 | Loretta Chao
News Link: http://www.wsj.com/articles/logistics-investors-launch-supply-chain-technology-accelerator-1459116007