Dynamo Ventures, a supply chain-focused seedstage venture capital fund based in Chattanooga, Tennessee, announced Wednesday that it has successfully raised $ 43.21 million in Fund II.
It’s more than double the size of Dynamo’s $ 18 million Fund I raised in 2016 and is now fully deployed in the corporate portfolio. Dynamo said it will continue to create seed stage checks, typically $ 250,000 to $ 1.2 million, for FreightTech start-ups looking for product / market suitability.
Operated by partners Ted Alling, Jon Bradford, Barry Large and Santosh Sankar, Dynamo was founded in Chattanooga after the freight broker Access America was sold to Coyote Logistics in 2014 and Coyote was acquired by UPS in 2015.
Sankar and Bradford said there were two major tailwinds in Dynamo’s funding process. How the COVID-19 pandemic caused industry outsiders and individual consumers to feel the pain of supply chain disruption, and the performance of Dynamo’s Fund I portfolio company.
“When I first started raising money before the pandemic, I asked the following question:’The size of the supply chain: [sector], Because you have a special fund “? Bradford remembered. “By the end of the raise, the question we were asked was,’Why aren’t more investors involved in this space?’ “
“The supply chain was optimized within an inch of its lifespan before the pandemic,” Bradford continued, arguing that cost-based optimization often introduces vulnerabilities. This was followed by a Suez blockade, a shortage of semiconductors and a container crisis, and a new consensus on supply chain flexibility, resilience and the need for faster decision-making. The long-standing problem of demand forecasting, inventory management, and efficient use of transport and storage capacity poses new urgency, especially among venture capitalists who are accustomed to thinking about the movement of bits rather than atoms. I have come.
According to Sankar, Dynamo Fund I’s performance is included in the top 5% of its vintage seed funds on a net total payments (TVPI) basis. Net TVPI refers to the ratio of the amount invested by Dynamo investors to the total value of Dynamo’s position in the portfolio company, to measure the performance of funds that are too young to fully repay a limited number of partners. Often used.
Dynamo’s portfolio, backed by German digital freight broker Sennder, became Dynamo’s first unicorn, raising $ 240 million in Series D with a $ 1.45 billion ex-post valuation earlier this month. Dynamo first invested in Sennder in 2017. Other Dynamo portfolio companies that have recently gained praise include Atlanta-based digital warehousing and distribution network STORD ($ 505 million as of March 2021) and Irish drone delivery service Manna Aero. I will. Series A at the end of April. Some bets didn’t work, as you would expect from a high-risk seed stage portfolio. Starsky Robotics, a promising autonomous truck carrier incubated with Y Combinator backed by Dynamo in 2017, failed in 2020.
Dynamo’s performance was strong enough to convince Fund I investors to double, but then continued to raise more money.
“Our fund ILP has committed more than the same amount,” says Sankar. “They said,’I want to see the future of the franchise here and support it.'”
Sankar said that after the VC trend expanded, Dynamo would invest more capital on any occasion, and in addition to the size of the fund, the initial check size and the reserves it would hold for subsequent investments would be virtually 2 He said it had doubled.
According to Bradford, the abundance of capital chasing a relatively small number of top entrepreneurs means that accelerating the investment process can be a differentiator for VCs. Dynamo recently met and invested with a team in San Francisco, he said, with a total elapsed time of eight weeks from the first email contact to the cash wiring.
“Money isn’t always off the stack,” Bradford said, saying Dynamo wasn’t feeling the pressure from late VC funds investing in the seed stage. According to Bradford, dynamos are experiencing more “preemptive rounds,” for example, companies can raise Series A months after the seed round, waiting a normal year or so between investments, the company.
These pre-emptive rounds raise valuations and put pressure on growth funds to invest in Series A and B rounds, but Bradford says there is a risk that young startups will struggle to grow to higher valuations. I did.
“Markets are everywhere,” Bradford said. “We stay in our lane and stick to what we are good at: supply chain and mobility.”
Dynamo Ventures Raises $ 43 Million Fund II for FreightTech Seed Investment
https://www.freightwaves.com/news/dynamo-ventures-raises-43m-fund-ii-for-freighttech-seed-investing Dynamo Ventures Raises $ 43 Million Fund II for FreightTech Seed Investment