September 2022

Meet our Founders #1 – Monja from Smartlane

Smartlane is is a transport optimization and analytics engine with fully-automated transport planning and industry-specific process mining capabilities. We have talked to co-founder Monja Mühling about the company's growth and recent developments.

Monja, to those who don’t know Smartlane yet, how would you explain it in two sentences?

Smartlane is a Software as a Service company in the logistics industry. We automate how transport orders are allocated across our customers’ vehicles. For this, we use artificial intelligence to make transport operations much more efficient, sustainable and a lot less complex to plan.

In the beginning of 2022, Smartlane closed their Series A financing round. What has happened since then? And what major topics are you currently working on?

The funding has given us an additional boost. We were able to hire further, really strong experts in all areas and will continue to do so. The new colleagues have settled in really well. This has enabled us to directly reduce bottlenecks in approaching and onboarding new clients. We were already able to tick some very important boxes on our product roadmap which further improved our software in terms of depth, width and usability.  

We also focus on partnerships with leading software providers in the logistics industry. Our products complement each other, and we can deeply access customer processes more quickly. We have been able to finalize some of these partnerships in recent weeks, both technically and commercially. Now the joint market approach is starting here as well.

The new funds also help us to push forward our mid-term and long-term vision. With Smartlane, customers will soon be able to optimize and automate entire logistics networks in addition to implementing intelligent and automated route planning. To achieve this goal, we have been working very closely with experts and strategic partners from the logistics services industry for some time.

What are the success factors for you when forming and growing a start-up in the logistics environment?

More and more logistics companies understand that artificial intelligence, automation and digitalization can truly make a difference in the complexity of the logistics sector. However, the industry is still at the beginning of the journey here and it needs all the more a clearly defined product and a detailed understanding of the customer to be successful in the market. We have, therefore, continuously adapted our strategy and processes and have learned a lot in the course of doing so.

Compared to other industries, logistics has not been the most attractive industry for young and ambitious "techies". At Smartlane, we prove the opposite with international, diverse, mixed teams across all areas of expertise. We’ve learned that a strong, forward looking company vision and progressive values play a vital role in attracting such talent.

With some caution, can we still call you an exception among LogTech founders?

Definitely. In general, female founders are still quite rare. In the logistics environment, the gap is even more apparent. At Smartlane, we are proud to have very strong female talent and experts in all departments, from sales to software engineering, on board. There’s one sector, however, where we see many female founders. And that’s Climate Tech. So maybe it’s the immense ecological impact of our solution that attracts female colleagues so much.

August 2022

Meet the Team #6 – Andreas, CEO

Let us introduce to you our team member Andreas. He talks about his journey and the challenges and opportunities of LogTech.

Tell us about your professional journey so far.

Since completing my studies, I have had the privilege of helping to build up new business areas and companies in the field of supply chain management both nationally and internationally.

Besides the strategic development of new businesses, I also enjoyed overseeing the operational execution of supply chain services in an international context for large multinational brands. This background allows me to understand the needs and opportunities of digital transformation well.

I have been working in digital transformation and venture capital for about six years. During this time, I helped build and shape the venture strategy for our investor FIEGE, resulting in numerous investments in new areas, such as Last Mile, Robotics, Smart Warehousing and many more, resulting in 30 direct and indirect investments in young companies on behalf of FIEGE, as well as accompanying first exits.

With F-LOG, we have now invested in five companies over the past 18 months.

What excites you about working in venture capital?

There are a lot of things. I love working with people who are highly motivated about changing established areas. I am thrilled by the diversity of ideas and the drive of the founders. To then advance topics together motivates me immensely. In addition, I tend to view change through digital transformation as an opportunity – an opportunity to gain efficiencies in processes, develop new businesses and ultimately, generate sustainable new financial results.

What do you look at when investing in startups?

According to the motto "The true pain point for a startup is to find a true pain point", I look not only at the founding team but also at the validity and potential of the idea or the startup. To me, it is of essential importance and a vital prerequisite that a new business adventure stands a high chance of a robust future. This is crucial for all parties involved such as the employees, the customer, and the investors as well.

What is your favorite topic in LogTech at the moment?

In particular, I find urban logistics, sustainability, and collaboration on the basis of smart contracts very fascinating and see great changes coming our way. Smart contracts are a sub-element of Blockchain technology that facilitate trustworthy and automatic transactions. This can be a fundamental basis for connected and collaborative supply chains allowing the gain of great efficiencies, especially when multiple partners such as manufactures, shippers, warehouses and transport companies construct a global supply chain.

Do you see any specific challenges that founders of LogTech startups are facing more than in other domains?

I don't really see any particular challenges. Rather, there are great opportunities, especially in cooperation with established market participants. This is where speed and scaling advantages can be generated. It is not just a question of money as some recent examples in Quick Commerce show, but also a question of solving a pain point that is commercially viable. And here, co-development especially in the early stage of a new business set-up can be a great advantage, if not a USP.

What can you learn for your everyday personal life?

I would like to learn and see more about valid use cases in the field of Smart Contract. I think this has the potential to improve the collaboration between distributed players in logistics as a whole in order to increase efficiencies and, above all, to act more sustainably.

July 2022

F-LOG’s Industry Perspective #5: Reverse logistics in e-commerce – a never ending story?

Germany is the European champion! At least when it comes to the rate of returns in e-commerce.

Returns in e-commerce. A problem that has been known for a long time – but who is able to tackle this problem? And what are the solutions?

The fact that the e-commerce sector has been growing continuously for quite some time is no big news. Likewise, it is not news that returns are an increasing problem. Online customers return more than 30% of their purchases.

Those involved in the market will know that how a customer experiences a returns process has a decisive impact on customer satisfaction and directly influences whether they will buy from the store again. Hence, performing well in reverse logistics is the cornerstone to building customer loyalty and repeat business.

So let’s have a closer look at why returns are both a real challenge and a market opportunity, and why we believe from a VC perspective that there is lots of space for technology-driven startups to make a real difference.

In 2021, the global e-commerce market generated sales worth USD 4,938 billion. With a CAGR of 16.8% from 2020 to 2021, the market has proven its immense growth for another consecutive year. The number of returns, however, has been reported to have doubled between 2019 and 2020, thus growing way faster than its parent market. In Germany alone, nearly 500,000,000 returned items have caused processing costs of more than EUR 5 billion (2018). While the fashion industry bears the biggest share of these costs (33%), recording the highest likelihood of items being returned (56% of fashion items are sent back), other product segments are affected, too. 91% of retailers across segments state that their return volumes are growing.

Let’s dig deeper into the retailers’ perspective and try to understand why returns are problematic.

Pain points from retailers’ and shoppers’ perspective
  • High costs of returns: Depending on the retailer’s size and individual processes, a return will cost a German online retailer somewhere between EUR 8 and 10 per parcel. While half of this amount goes to the actual cost of transportation, the other half represents the cost of processing the return. Such high costs even lead some companies to refund the customer’s expense without asking them to return the purchase. Hence, companies prefer to give away the goods for free than to invest time and money into the return shipment. All in all, profit margins and conversion rates deteriorate significantly and may even discourage businesses in the long run.
  • Return processes have a major impact on the NPS and customer satisfaction. Unpleasant return experiences often negatively impact the company, resulting in over 30% of shoppers avoiding the online store in the future. About 70% of all customers make purchases and potential repurchases dependent on the return conditions and their previous experience with returns.
  • Complex processes: Return processes are mostly paper-based, non-digital, and require manual handling of physical goods. Moreover, the manual inspection and assessments of the quality of the returned goods is often based on subjective perceptions.
  • Uncertainties: Retailers have difficulties in anticipating returns and taking them into account in inventory planning

Also, customers face certain pain points when it comes to returning their online purchases. For more than a third of customers shopping online, paying for the cost of a return is the biggest pain point. Due to ever-increasing costs for returns, more and more retailers are asking for fees for returning items again.  But which other pain points do customers experience when returning goods shopped online?

  • Inconvenient return processes: Just over a third of all online retailers include the return label with the initial delivery. Roughly 50% of all retailers expect customers to download and print out their return labels themselves. In the remaining cases, consumers either have to download and print the label, request one in person (via e-mail or by phone) or buy one directly at the carrier shop. Even if these procedures are an inconvenience for the customer, they sometimes allow retailers to better anticipate returns and improve their inventory planning. Moreover, some retailers intentionally create inconvenient return processes to prevent the customer from returning the goods.
  • Non-transparent return processes: More often than not, a purchase will only be credited to the customer's account once the return has reached the retailer's warehouse.
  • Non-transparent return policies: One in three customers decides against buying from an online retailer because they have difficulties finding information on the return policy.
  • Limited options to return goods: Most retailers still require customers to take their returns to the post office themselves. On average, only 8% of retailers offer free returns pick-up, and one percent of retailers offer to pick up returns at a fee.

Let’s not forget the environmental impact of returns: In Germany, returns accounted for 238,000 metric tons of CO2 equivalents (CO2e) in 2018. Even before 2020, every year, a remarkable 2.3 billion kilograms of returns were disposed at landfills only in the U.S..

Funding & exits

Driven by the high relevancy of the topic, reverse logistics is clearly a field of high potential when it comes to founding new businesses. Startups tackling current developments in the e-commerce industry bring high hopes to investors which is emphasized by recent funding in the field of reverse logistics. However, looking at recent investments, the US market once again seems to be ahead of Europe. Especially in the US, startups have raised significant funding recently, which demonstrates how hot the topic is. Therefore, let us take a look at recent funding and exits. 

Optoro - total raised: USD 360 million: Optoro helps to solve the above-mentioned issues on both the retailers’ and the consumers’ sides. It allows online shoppers to return goods label-free and box-free at more than 1,000 stores in the US for an immediate refund or exchange. Retailers use the software to resell returned inventory on various channels and also to outsource the fulfillment of returns or to optimize product-related decisions based on AI algorithms. Other startups in the returns domain that have recently nabbed significant funding are Loop (USD 78 million) and ReverseLogix (USD 20 million).

In addition to growth capital funding, renowned last mile and software giants have shown major interest in acquiring returns technology startups. Veho, a technology company that enables next-day delivery for e-commerce brands, recently announced the acquisition of QuikReturn. The reverse logistics startup QuikReturn has developed a new technology to offer its customers a scheduled pick-up of returns. At the time of Veho's acquisition, QuikReturn had already raised a total of USD 300 million and was most recently valued at USD 1.6 billion.

Further remarkable exits in this space include PayPal’s acquisition of Happy Returns as well as Returnly’s acquisition by affirm.

F-LOG perspective: how to tackle the challenges of returns?

Returns in e-commerce come with a variety of challenges. Here at F-LOG we believe there are several starting points for potential solutions that can tackle these challenges:

  • In order to reduce the number of returns in general, it is necessary to work on solutions pre-sale. By using A.I. and augmented reality, for example, customers can be given a more precise indication of products before they buy them, thus reducing the likelihood of a return. However, from a VC perspective, these models have not yet gained significant traction. The acquisition of Presize by Facebook is one of the first major exits in this area. Besides, Presize is still in a very early phase, which does not yet support an appropriate assessment of the deal.
  • The return process is critical to customer satisfaction. Furthermore, additional touchpoints can be addressed. Solutions that deal with central drop-off points for returns or the pick-up of returns are highly interesting for customers as well as retailers due to their direct impact on customer satisfaction.
  • One of the hottest topics at the moment are last mile delivery models. Every day, Lieferando, Gorillas et al deliver groceries and other consumers goods directly to our doorstep - only to return to their base with an empty backpack. Surely there is a way to integrate the pick-up of returns into existing last mile models.
  • Up until now, the (physical) handling of returns goes hand in hand with an immense manual workload. Those who manage to automate processes, for example with the help of robotic or data technologies, are guaranteed to strike a nerve with all retailers and logistics providers.
  • The alarming amount of returned goods that are disposed at a landfill has been highlighted above. Isn't there a way to save these goods from the landfill and reprocess them for sale?  Again, US-startups like Optoro give hope.
  • Returns put retailers under economic pressure, are a major disruption to the consumers’ shopping experience and should be avoided all together, or in the least handled more sustainably for a number of ecological reasons. From a VC perspective, these aspects should be a reason for startups to apply cutting-edge technology and thought-through business models to address the returns market. Especially with regard to Europe, we expect to see a major change here.

June 2022

Meet the Team #5 – Daniel, Investment Analyst

Daniel Granados is an Investment Analyst at F-LOG Ventures. He brings experience in venture capital and M&A to the team. Read on to find out why he is the perfect addition to the F-LOG Ventures team and which LogTech trend fascinates him the most.

What was your journey into the world of venture capital?

After finishing my bachelor's degree in Economics at the University of Bonn, I was given the opportunity to put many startups to the test in the software team of High-Tech Gründerfonds for a bit more than a year. Then, following my master's degree in St. Andrews (Scotland), I spent almost two years in M&A consulting, where I handled the supply chain issues in a number of transactions before returning to the venture capital industry in March 2022. Now at F-LOG, I am following the developments in the LogTech sector and discovering the future disruptors of the supply chain.

What excites you about working in venture capital?

The technology we use today looks nothing like it did only ten years ago. Working in venture capital means embracing the new, helping to transform existing industries, and to create new ones. In this sense, there are no limits to creativity and innovative thinking, which makes me feel positive about what future entrepreneurs bring to the table.

And why F-LOG Ventures?

F-LOG is seeking the champions of tomorrow while combining the "old" and "new" economy by trying to solve today’s pressing issues: The digitalization of the logistics industry and the advancement of exciting technologies. The team of F-LOG has the privilege to not only act as an independent VC but also to have the operational experience and network from our investor FIEGE to give logistics startups the perfect support. This is a positive “unfair advantage” which adds value to what F-LOG gives to entrepreneurs.

In your opinion, what is the hottest topic in logistics at the moment?

There is incredible potential for LogTech business models of startups serving the sustainability efforts of retailers and consumers. In addition, there are business models in the circular economy and reverse logistics which are still rather undeveloped compared to the already huge and growing e-commerce market, yet will become more and more relevant in the near future due to growing pressure from users. I am therefore particularly looking forward to such technologies.

What is your most important lesson learned in venture capital so far?

The short answer is: don't decide immediately.

When you are presented with a topic or analyze new business models, it is advisable not to listen to your first instinct, as it can often deceive you. It has been proven that prejudice or stereotypes are some of the many biases that influence our decision-making ability. Especially when dealing with the unknown, we often are biased because we feel we have already figured out everything there is to know about a topic, or because we have heard of other similar solutions that did or did not make it, or because we just follow trends.

Such traps are part of our everyday life and therefore it is especially advisable to constantly question ourselves in order to really discover the most exciting and disrupting innovations. This is the only way you will discover pioneers.

May 2022

F-LOG’s Industry Perspective #4: Rethinking sustainable logistics – the green transformation ahead of us?

Sustainability has been an omnipresent topic not just since recently – so how could we not address it in terms of logistics and venture capital scene developments?

We’re all aware of the fact that the sustainable way of doing business has become more important in recent years. Resources are scarce, consumer behavior is changing towards a more eco-friendly product or service choice, technologies are evolving extremely fast, and political regulations are tightening because of e.g., specific emission targets in the Paris Climate Agreement. Our society is demanding a green transformation and businesses have to deliver. They are adjusting their strategies or even developing new business models to meet their customers’ needs and reduce their ecological impact – especially in the logistics sector.

Startups with the goal of making our markets more sustainable are becoming increasingly interesting for venture capitalists although this trend is nothing new in the VC scene. Cleantech startups using clean technologies to fight the climate crisis or preserve resources, for example, were already booming in the early 2000s. However, their often hardware-heavy approaches could not be scaled sufficiently, and their long-term product development was very unclear, making investors hesitant about investing big.

Since then, two major developments have emerged. Firstly, the mindset of investors has broadened - a development also driven by funding and investors wanting to follow ESG (environmental, social, and corporate governance) criteria, thereby focusing on ethical actions. Secondly and more importantly, the mindset of high potentials has evolved towards the ambition for their business actions to have an impact. While in the early 2000s, a corporate lifestyle at investment banks or consulting firms was the ultimate goal, today, many high potentials are per se increasingly motivated to found their own company and thus have a significant say in the strategic direction and the value culture of their startup. The desire to have a positive impact adds up to this and encourages more founders.

From our perspective, this is the best thing that could have happened. In the past, a major disadvantage of sustainable companies was that they had the stigma of failing to reach their purpose. With the tremendous talent that the sustainability sector has gained over the past years and the commercial development that has come with it, the sector is ready for big investments and to create an enormous impact. From a logistics perspective, we identify several business models and fields of application that address the circular economy:

Reducing CO2 emissions

This is probably the most obvious claim. At F-LOG, we are seeing an increasing number of companies targeting the global CO2 emission problem and seeking funding. This especially concerns modes of transport for goods and commodities, including the entire field of e-mobility. Electric commercial vehicles like trucks, but also electric ships and planes have slowly been developing over the past few years due to the zero-emission target of all transport by 2050 under the Paris Climate Accord. In Europe, Volvo is one of the market leaders in e-trucks but only sold 346 units in 2021. So far, no European country has managed to actually utilize e-trucks in numbers above a three-figure rate - with Switzerland and its 77 e-trucks in operation leading the way. Germany ranks fifth with 37 purely battery-driven electric trucks. One of the biggest challenges remains for the battery capacity to handle routes of more than 200 km and the associated time needed to recharge during which the truck cannot be driven. This leads to increased transport costs and results in productivity losses in the single good sold. Shifting perspective to the last mile, many (lately well-funded) startups try to address sustainable deliveries by concentrating on transport modes like cargo bikes or vans (e.g., Liefergrün, GetHenry, or Packfleet) or autonomous robots. Starship, for example, secured US$ 100m in two rounds within 30 days both executed at the beginning of this year. This investment enables them to expand their autonomous delivery services to North American and European cities. For more information on the last mile, check out our city logistics blog.

In addition to transportation, developments at management software level are also apparent. Especially tools helping corporates with emission tracking and ESG compliance are gaining traction. Solutions throughout the entire supply chain are already simplifying and supporting the individual decision-making process on the reduction of CO2 emissions. Companies like the French startup Sweep (US$ 100m funding), Persefoni from the US (US$ 118 m), or Berlin-based PlanA (US$ 13m) already received substantial funding despite being relatively new to the market, which shows investors’ growing interest in business models tackling sustainability solutions.

Waste reduction

Another field being progressively disrupted in terms of sustainability is waste reduction. And just as the recycling process itself, the ecosystem involving startups addressing the waste management sector is a circular one: there are startups that try to convince the customer to change their behavior toward a more sustainable and conscious consumption – then there are those with tools to manage the already generated overproduction (e.g., Misfit) – and those that aim to reduce or to avoid waste all together (e.g., PlasticEnergy).

A specific use case of waste reduction is the packaging of goods. According to the Cradle2Cradle (C2C) concept which recycles raw materials to be fully reused, sustainable packaging should be recyclable or biodegradable. The packaging includes all materials used to send an order as well as transport packaging such as pallets, covers, transport cages, and shrink film. Regulated by the German Packaging Act, which was introduced in 2019, companies that bring packaging into circulation are also responsible for taking it back and sorting it, as well as documenting details of how it is/can be recycled. This and the mandatory registration of packaging solutions, among other things, will be tightened by July 1, 2022. Alternative concepts range from reusable packaging such as heavy-duty boxes or pallets to different combinations of materials that are easy to recycle or have themselves been recycled (e.g., paper, cardboard, or carton). Exemplary startups include London-based Notpla receiving more than US$ 13m in December 2021 or the mature US startup Temper Pack raising a Series D of US$ 140m in March 2022. Rather young is Woola, which is providing sheep wool-based compostable packaging solutions.

Efficient use of warehouse space

Lastly, an essential role is played by where and how goods are stored with the goal of reducing unused space. As the prices for logistics spaces continue to rise, discussions often revolve around whether existing space can and should be used in both warehouses and other storage facilities, or whether new real property should be built. It certainly does not need to be emphasized here that the former option is probably the more sustainable one. However, a trend is seen here toward investments in new buildings regardless of the segment. Alternatives to new spaces are, for example, options like on-demand warehousing and mini hubs in urban areas. On-demand warehousing offers the opportunity to flexibly store and digitally manage goods while sharing spaces with several parties when not in use. Advantages include, e.g., filling fluctuating warehouse occupancy, shorter last-mile transport routes as well as shorter or more precise delivery times. Another concept that, for example, SpaceFill offers is to use the platform’s economy to make available space visible, and easy and fast to rent out. The French company secured US$ 25m recently in a Series B led by NGP Capital and Maersk Growth.

Sustainability is here to stay and that’s a good thing. This blog adds value to discussions about current developments in the logistics sector. A lot is happening in terms of transportation, warehousing, and the materials used, showing just how diverse sustainability can be.

Our final words of wisdom:

It’s never the businesses alone that make the change. It’s us. The consumers. Our daily decisions set the course!

March 2022

Meet the Team #4 — Tanja, Managing Partner

Another team member of F-LOG Ventures is Tanja, our Managing Partner. As always, below you’ll find some interesting questions Tanja answered for us.

Tell us about your professional journey so far.

I came across venture capital by chance during my trainee program at the start of my career. Immediately excited, I went directly into VC. That’s why I’ve been on the investor’s side for quite a long time, and I still have a lot of fun working with founders and startups.

What excites you about working in venture capital?

Venture capital is all about new business models, people, problems, developments and challenges day in, day out. Things never work out the way you imagined, they always change and you have to react to them. This is what I like best — you never get bored. Sometimes things go well, sometimes not, but the cooperation between the founders, the team and the investors is always important. When you reach your common goal with the startups, it’s a great feeling.

What do you look at when investing in startups?

For me, in addition to the business idea, the team is super important. Ultimately, it is the founders and the core team that make a business model succeed. However, we as investors need to have a good assessment of the situation, which also requires a lot of experience and gut instincts. The teams naturally present themselves at their best during pitches and want to convince investors of their merits. For us, it is crucial to understand how the teams function internally and how they communicate in critical situations with their investors.

Other than that, the past development of the company, the KPIs, the technology, the customers, etc. are of course necessary for us. They give us a good picture and validate the team’s assumptions about the market, other investors and also customers.

Why did you join F-LOG Ventures?

I had the opportunity to set up F-LOG Ventures from the very beginning which I found very exciting, especially since I had already set up another fund. A lot of heart and soul always goes into this and you feel like a startup yourself, which is also good for an investor.

I consider F-LOG’s focus on the extended field of logistics to be an essential USP to enable us to really support our portfolio companies beyond money only. With the know-how, market insight and network that F-LOG can offer here, we see ourselves as a partner for startups in the logistics sector and this is what sets us apart from many other VCs.

In your opinion, what is the hottest topic in logistics at the moment?

There is a lot of movement in the logistics sector. COVID-19, in particular, has strengthened this trend. As F-LOG, we are currently looking at a number of topics that we consider to be extremely interesting. This includes supply chain resilience. Current supply chain problems, e.g., as seen in the automotive industry, show how important and fragile the supply chain still is. Here, many startups are rethinking existing processes and using innovative approaches to solve the problems. We see that the demand for new logistics solutions will continue to grow.

Are there any learnings from your professional life which you value in your private life, too?

Always be yourself and be confident in what you are doing, whether it is going well or not.

Are there any tips you would like to share with entrepreneurs looking for funding?
  1. Prepare well for an interview. Rehearse beforehand, maybe even get tips from experienced founders. The network is huge and helpful in this area.
  2. Show yourself as you are. Give your opinion without letting yourself be taken away from it because you are afraid to tell the investor something they don’t want to hear.
  3. Approach the situation as if you want to convince yourself as your biggest critic.
  4. Be open to new directions if the investor is the right match.

March 2022

Meet the Team #3— Michael, Investment Manager

Who else is behind F-LOG? To give you a better idea of the team we prepared some questions for each of them. Next up: Michael.

What does working in Venture Capital mean to you?

First and foremost, to me, it means always questioning your beliefs, every day. In the VC market, you work on issues that often go 100% against existing industry logic. That is super exciting! You get to work a lot with the latest technologies and great founders! The work is very meaningful because you help these founders build something very big and valuable, solve problems, and create jobs.

What was your most important lesson learnt in Venture Capital so far?

My job consists to a large extent of asking questions and listening. Coming from a professional role where I was more used to having to give answers, this was new to me at first. But I love listening to founders, asking the right questions, understanding their true motivation, and learning together with them.

What was your journey into the world of Venture Capital?

My professional background is in logistics. I spent three years driving strategic projects and strategy development in the Corporate Development department of our investor FIEGE, gaining very deep insights into logistics market segments and customer pain points therein. When F-LOG Ventures was founded, it was clear to me that I wanted to become part of this team. My network in the industry helps me a lot today to evaluate new business models and to really help the founders of our portfolio companies. My academic background is more broadly in business administration. I studied in Germany, England, and Indonesia.

What makes a great Venture Capitalist?

Short answer: Everything that comes after the funds have been transferred.

What is your favorite topic in LogTech at the moment?

It is difficult to choose just one. A challenge that moves me enormously is the digitalization of the small logistics players. Many business models are limited to corporates with strong purchasing power as customers. On the other hand, there are many lightweights in logistics which together make up at least 90% of the market. The European industrial space is highly fragmented. We see a huge potential in digital and technology-based standard tools for these small logistics players who will be the first to suffer from the shortage of skilled workers and are all the more dependent on digitalizing and automating their logistics and information processes.

Do you see any specific challenges that founders of LogTech startups are facing more than in other domains?

Most of the teams we work with need a very strong understanding of B2B processes that have developed over a long time, differ widely from one supply chain to another and rely on an outdated IT infrastructure. Incorporating new digital products into or building on top of these environments is not always an easy task. Having the right sales and onboarding process in place is therefore highly important. Otherwise, there is a risk of sales cycles becoming too long. From my perspective, this aspect is even more dominant in the logistics and supply chain domain than in other B2B domains, such as HR or accounting.

What can you learn for your everyday personal life?

Aim towards a higher goal that others think is unachievable. Then, find the right supporters and prove the critics wrong.

March 2022

F-LOG invests in Saabrücken-based deep-tech startup natif.ai in a 5 million Euro Seed round

natif.ai, a Saarbrücken-based startup, offers an automatic and self-learning text recognition system. The startup is seizing the huge market opportunity of intelligent document processing. Led by a strong team of founders who contribute their outstanding expertise from the field of AI, F-LOG decided to invest. natif.ai secured a seed investment of 5 million euros.

The founders of natif.ai: Johannes Korves, Christophe Hocquet, Manuel Zapp, and Bérenger Laurent

Saarbrücken, 09 March 2022 - natif.ai secured funding of 5 million euros in a Seed round. Next to the existing Pre-Seed investors 468 Capital, the High-Tech Gründerfonds (HTGF), and Premius, F-LOG Ventures invested alongside the early-stage investor Redalpine leading this round, and business angel Phillipp Rechberg.

Even today, sending, signing, and reconciling documents make up a significant part of everyday business across industries. In logistics, specifically, this may include delivery bills, inventory lists, invoices, etc. The deep-tech startup natif.ai helps to tackle inefficiencies in document processing and handling as it focuses on intelligent document process automation (IDP).

natif.ai uses high-performance AI models and deep-OCR developed in-house to serve its customers with the ability to analyze a large variety of documents extremely fast and efficiently. In detail, this means that documents can be processed 30-60 times faster with an automation rate up to 10 times higher compared to commonly-used technologies. The startup operates the platform which enables its customers to conveniently set up document-related workflows using natif's workflow engine. Additionally, the platform integrates customer workflows into existing processes with ease, attracting businesses from different industries. The technology is ready for immediate use and complies with all European data protection regulations.

The latest investment round will enable natif.ai to further invest in the growth of its company. The startup is already in the process of growing its team and is looking to bring additional developers and sales experts on board. In order to keep up with competitors in the long term, the company will be expanding internationally. Especially when it comes to entering new markets, F-LOG, with its international network and know-how in logistics and supply chain management, will actively support the startup.

The F-LOG team is proud to join Johannes, Christophe, Bérenger, and Manuel on their journey to becoming the leading IDP platform.

January 2022

Smartlane secures 6-million-euro funding to push their transport intelligence software

Smartlane, an F-LOG Ventures’ portfolio company since early 2021, has secured blueworld.group as a new investor on their way to developing the number one transport intelligence software. Additionally, they secured grants from the European Innovation Council. Their transport optimization and analytics engine with fully-automated transport planning and industry-specific process mining capabilities improves logistics companies' efficiency, reliability, and transparency.

The Smartlane founders Mathias Baur, Monja Mühling and Florian Schimandl

Munich, 11 January 2022 - Our portfolio company Smartlane recently secured 6 million euros in funding. Following an intense competition, they won a total of 1.7 million euros in support funds from the European Innovation Council (EIC). In addition, they successfully closed a Series A financing of more than 4.5 million euros, backed by F-LOG Ventures and other investors like Freigeist and the new investor JOVA Direkt Invest GmbH, an investment vehicle of the blueworld.group.

Smartlane offers an AI-based SaaS solution that optimizes and automates the dispatching and transportation planning for road haulage. Their software analyzes over 250 planning parameters, thereby saving up to 90% of the time spent on dispatching which at the same time reduces the CO2 footprint of freight forwarders and logistics companies. Since 2015, the team has achieved outstanding progress both in terms of product maturity and business development. In addition to refining their AI, they have achieved €360,000 in savings per customer location per year.

Smartlane’s solution is in response to the rapidly changing transportation market. The general cargo market, which is currently Smartlane’s focus segment, is growing exponentially, not least due to a rise in order volumes during the pandemic - a situation that has become even more critical due to a shortage of drivers and dispatchers. Also, the growing awareness of green, sustainable logistics shows once again that a cloud-based AI solution that aims to optimize logistical operations is essential to saving resources and ensuring operational excellence.

We therefore welcome the new investor to the club of motivated investors ready to support Smartlane on its way to the number one transport intelligence software. The investment will enable Smartlane to significantly grow its team and write the next chapters of its success story.

November 2021

F-LOG´s Industry Perspective #3: City logistics and why it will remain a hot topic

For many e-commerce firms it has always been essential to be close to big cities and metropolitan areas. With the goal of wanting to improve logistics within the city, more startups and investors are expected to reallocate capital to urban logistics and decentralized fulfillment solutions.

But is city logistics really that special? Yes, it is!

Why? Last mile delivery, especially within inner cities, is the most inefficient step of the entire supply chain, 61% of surveyed logistics companies say. This is also because it is the most expensive part of the supply chain, taking up a 53% share in the shipping costs. So, let’s talk city logistics.

By definition, city logistics refers to the distribution of freight in urban areas. With demand growing for both a service economy and life in urban areas, cities are challenged to provide more frequent and customized deliveries. More specifically, urban goods movements utilize around 20% to 30% of kilometers driven in the metropolitan area.

City logistics is a playing field that differs strongly from other areas — especially when it comes to logistics. Looking at supply chains, logistics mostly takes place in surroundings that are specifically created for the handling, storage, and transportation of goods. These surroundings are designed by logistics experts. As soon as logistics enters the city, this is no longer the case. In fact, logistical requirements are often neglected in urban planning.

And why is it such a complex concept?
  • Software requirements: The city is the place where outdated B2B logistics software will meet the highest UX-related expectations of consumers. Studies show that 56% of consumers would not buy a brand again if they were not satisfied with the shipping service. This state-of-the-art customer experience can only be achieved when the software used by last mile logistics providers and retailers allows a smooth and steady communication with the recipient. As the systems used to date are technologically outdated in most cases, the key enabler of such experiences is missing.
  • Process flexibility: Additionally, it is important to remember that the consumers developed more personalized and flexible service requirements throughout the last years. The delivery should be as convenient as possible, such as, for example, having the possibility to choose a specific time window for delivery of the order even though the parcel is already on its way. This complicates the processes for the company while the technology behind such processes becomes even more relevant.
  • The number of powerful stakeholders: Inner-city logistics constraints are being defined at all levels. Not only by the European Commission, whose low emission zone policy is becoming more and more stringent, but also the cities themselves restrict the access of transport vehicles.
  • The high density and diversity of competitors: Borders between CEP giants, food delivery services and innovative last-mile service providers are increasingly blurred (as can be seen when looking at Delivery Hero’s Germany come-back in the quick commerce market) as core competencies widely overlap.
  • Hardware-related requirements: Scooters would struggle to deliver furniture, but neither are more trucks a solution either. Last-mile robots and drones are not only facing physical challenges posed by curbsides, lampposts, and cables, but also legal frameworks. For this reason, the most practical application of UAVs and other robots is still in the pilot phase.
Major VC investments in city logistics

A small tour of the more recent venture capital (VC) history in city logistics shows us that a lot has happened. Makers of semi and fully autonomous last-mile vehicles (e.g., Starship, Nuro) from all over the world receive billions in funding every year. Restaurant delivery startups like Takeaway became grown-ups a decade ago already. Those who deliver food and consumables instantly from their own micro warehouses — known as flash supermarkets — are the latest VC hype with hundreds of millions in VC funding for Gorillas, Flink, and others in only a few months. Both Gorillas and Flink were founded in Berlin at the end of 2020 and since have raised US$1.3 billion and US$304.2 million in total respectively. And even if we look at mobility as logistics’ partner in crime, micro mobility such as ride hailing, scooter and unmanned aerial vehicle (UAV) startups, e.g. drones, have been VC targets for a long time.

Despite all this funding, we are convinced that in Europe, city logistics has yet to live up to its full potential!

… and why it will remain a hot topic

From our point of view, some “white spots” in the urban area that are ready to be revolutionized include:

  • Delivery service orchestrators: Who will find the solution that succeeds in reducing the number of vehicles of different service providers that cover the same routes every day? Pilots such as the Berlin KoMoDo project, in which Germany’s key CEP service providers (DHL, DPD, GLS, Hermes and UPS) collaborate by sharing city hubs, show the great potential of a joint effort. However, the digital concept breaking the established industry logic is still missing.
  • Micro hub network operators: Who will succeed in decentralizing fulfillment infrastructures in a way that brings the new standard of instant and highly flexible delivery to product groups other than food? Initial investments by VCs indicate the new wave. However, the winning business model is yet to be found. Will it be the B2B service provider with innovative last-mile infrastructures and services — the “Gorillas for non-food retailers” — building a proprietary B2C marketplace brand? Or someone else?
  • Retail connectors: Who will convincingly connect local retailers with the last mile for them to run a true omnichannel business? Are ship-from-store startups scalable? And do they offer potentially strong margins?
  • Returns champions: Who will design the desperately awaited solution that takes the pain out of collecting, processing, and redistributing e-commerce returns in an environmentally friendly, convenient, and efficient way? Can business models that became huge in the U.S. succeed in Europe too?
  • Crowd enablers: There should be ways to involve the crowd in last mile logistics. What is common across all Asian and South American regions has yet to take off in many European countries.

When talking about new LogTech business models, cities are the melting pot for cutting-edge technology-, hardware-, and consumer-driven requirements in logistics. These requirements are key to innovative concepts coming up in the future. VCs should be prepared and keep an eye on city logistics.

©2022  |  F-LOG Ventures Management GmbH