Home to a certain e-commerce giant, the city of Seattle has been surprisingly slow to develop a network of logistics startups, but that is changing as more Amazon (NASDAQ: AMZN) and Microsoft (NASDAQ: MSFT) employees invest their wealth and talent in homegrown freight-tech and delivery companies.
“Seattle in general is not known for logistics compared to some other regions of the country,” said Jason Murray, CEO and co-founder of Shipium, a two-day shipping startup that launched in the city in 2019.
Among other factors, Murray credited the infusion of technology into logistics for starting to reshape that perception.
“The biggest thing is there is excellent tech talent here,” he said. “If you are doing a tech-first approach to logistics, Seattle is a good place to be.”
Buoyed by the booming stock market, 2019 was good for Seattle startups of all kinds. According to Pitchbook data, Seattle startups raised a total of $3.5 billion of funding in 375 deals last year, up from $3 billion in 2018 and $1.7 billion in 2017.
Add to that the presence of Amazon and its explosive growth — the online retailer’s stock quadrupled in value over the past five years — which has minted a new generation of multimillionaire employees eager to test their entrepreneurial mettle on a sector that not long ago was considered anything but innovative.
“When I started in logistics 20 years ago, logistics was not cool,” said Dave Glick, chief technology officer for Flexe, a Seattle-based on-demand warehousing startup that landed $43 million in 2019. “Amazon,” observed Glick, who worked in the e-giant’s logistics division before joining Flexe, “has single-handedly made logistics cool.”
Seattle freight-tech and delivery companies founded by former Amazon executives include Instacart, Shipium, Flexe and Convoy, a digital freight company that in November raised a whopping $400 million on a valuation of $2.75 billion.
Although Amazon and Microsoft have produced “a bunch of rich people,” Glick said, the Seattle startup scene is only beginning to reap the benefits. That’s because despite its force in American culture and commerce, Amazon is still a fairly young company.
Only recently, according to Glick, did the e-giant start to churn out people with the years of experience necessary to convince VCs they were up to the task of running a logistics tech firm.
Seattle still lags San Francisco in number and value of VC deals, and the city has long lamented the lack of early stage capital. That too is changing with the addition of new funds like PSL Ventures, the venture arm of Seattle startup studio Pioneer Square Labs that led a $2 million seed round in Shipium last month.
“We really wanted to raise locally,” Murray said, adding that it was a lot easier for Shipium to make that happen than it would have been 10 years ago.
The Madrona Venture Group, a Seattle stalwart, has done its part to bolster the Seattle startup community. The firm raised a $100 million Acceleration Fund earlier this year and continues to be a dominant player in the Pacific Northwest startup scene.
Other factors are helping turbocharge the logistics tech ecosystem. The University of Washington not only houses one of the top computer science schools in the country, but it is also home to the Urban Freight Lab, an innovative research consortium that brings public- and private-sector partners to work on some of the most pressing challenges created by the e-commerce revolution.
“Necessity is the mother of innovation,” said Anne Goodchild, the founding director of the UW’s Supply Chain Transportation & Logistics Center, which launched the Urban Freight Lab in 2016.
In an email to FreightWaves, Goodchild singled out the tremendous growth pressures that have forced the city of Seattle to engage with the private sector on creative solutions.
“We’ve had to look more closely at how we use existing resources and how we get more capacity without just continuing with the old ways of thinking,” Goodchild said.
The region has a long history of applying technology applications to the public sector, a legacy the lab is continuing with its last-mile delivery pilot projects, which include e-bike delivery and downtown locker trials.
Even before Amazon and technology changed the logistics game, the city was known for a solid network of freight organizations, said Glick, pointing to the Port of Seattle — along with the Port of Tacoma, it is the fourth-largest container gateway in the U.S. — and the warehouse sector located to the south of Seattle in Kent and Auburn, Washington.
Investment capital is following the critical mass of leaders coming out of Amazon, said Murray, who along with Shipium co-founder Mac Brown is a former Amazon employee.
“E-commerce has created such a glaring need,” Murray said. “That’s what’s driving attraction to these companies.”