With 90% of its revenues coming from the movement of containers, Maersk (CSE: AMKBF) faced a challenge: How do you get closer to the end customer when your job is to move containers from port to port? The shipping giant is trying to answer this question with its Growth investment fund, started in 2017.
“I think historically, our industry has not been very focused on the customer,” said Sune Stilling, head of Growth for Maersk. Speaking with Laura Fava, executive vice president of global commercial development for FreightWaves at the FreightWaves LIVE Chicago conference Nov. 13, Stilling explained how Maersk is approaching its venture fund and what it looks for in a startup company.
“One of the areas we are looking at is e-commerce,” he said. “You certainly don’t want something arriving in eight weeks, so we are looking at how we can get closer to the end customer.”
The fund, which partners with and invests in “ventures with the potential of creating exponential growth within transport and logistics and defining the future of trade,” has 15 companies in its portfolio, with an additional four or five to be added before Christmas if things go well, Stilling said.
Maersk is most interested in companies with a strong balance between industry experience and technological expertise, he said. “We see a lot of companies (about 100 a month) that are strong on industry but not on tech, or strong on tech but not on industry. We like to see both.”
One company that Maersk has invested in is Loadsmart, a New York-based on-demand, full truckload freight matching service. Stilling said he likes them because 60% of the company is tech focused.
“They are not taking what people have done for 200 years and calling it tech,” he said. “They are transforming [the market].”
Stilling said Maersk also likes companies that are “not focused on billion-dollar valuations” and on those that grow smartly. Growth that occurs too quickly, he said, leads to a plateau where the company either needs to cut to gain efficiencies or raise prices.
Stilling did bemoan the rapid investment in FreightTech companies. “I think the space is very crowded,” he said. “There are a lot of companies coming in and getting funded based on a 10-page slide deck.”
Many of those companies, he said, are “focused on the valuations and not the customer.”