Singapore’s sovereign wealth fund Temasek and transport mega Kuehne + Nagel have teamed up to launch a $50 million venture fund for logistics and supply chain startups under the name Reefknot Investments.
Reefknot wants to invest in six to eight Series A and B rounds, managing director Marc Dragon told TechCrunch. A typical Series B round can be $20-30 million, so it appears that Reefknot is not looking to be the lead investor in the majority of its deals. That orientation gives the fund a different risk profile than Maersk Growth, a similar strategic logistics venture fund, which has focused on early stage investments around food waste.
“There is a high level of expectation from vendors that because of technology, there will be new methods to do analytics and planning, and greater visibility in terms of information and product, materials and goods flowing throughout the supply chain,” Dragon told TechCrunch.
A growing number of sovereign wealth funds are pursuing direct equity investments and venture capital deals. Singapore, Malaysia, Abu Dhabi, and Qatar have all set up offices in Silicon Valley to source venture capital deals.
We understand Reefknot in the context of the maturing FreightTech venture capital marketplace that was established in 2014 with $112 million invested across 56 deals. In the past five years, the number of deals grew as the opportunity to digitize a paper-based yet vital service industry became more clear. At the same time, the average deal size grew larger as winners emerged in categories like visibility solutions and digital freight brokerage.
On August 30, FreightWaves published proprietary research finding that FreightTech venture capital investment in 2019 amounted to $5.6 billion so far.
Reefknot’s launch is a signal that the FreightTech venture capital cycle still has legs. Sovereign wealth funds and publicly-traded corporations represent the most risk-averse money in the venture capital marketplace; seed funds that place many small bets are on the other side of the spectrum. FreightTech venture investment has always been balanced between Asia and North America with Asia leading the way. The fact that an Asian sovereign wealth fund has entered the space speaks to the maturity of the sector in a region defined by its high-tech, export-oriented economies.