Logistics is a hot topic globally as the pandemic has interrupted supply chains – with the latest holdups in southern Californian ports underscoring the problem. A new VC fund aims to invest in what is seen as an under-invested space.

Niklas Holck, the former chairman of Denmark/California-based Nordic Eye Venture Capital, has launched his own boutique VC firm in Singapore. The move comes at a time when problems with logistics amid the pandemic are under a global spotlight.

Tradeworks.vc – as it is called - is an investment syndicate that aims to build an ecosystem of “Digital Trade Enablers,” to drive business through innovation mainly in logistics and crossing into e-commerce.

To date, Tradeworks.vc has raised $1.5 million at its launch and its first investments in two logistics technology scale-ups based in Singapore and Chennai respectively, will soon be announced. The anchor investor is Guernsey-based OracleVC, led by Tom Whitby. The firm has a global focus, targeting early growth start-ups and scale-ups at the Seed to Series A funding stage. It is aiming to invest $100,000 to $2 million per deal.

Holck, who is the chief executive of the new business, has more than 15 years’ experience in the wider logistics space, including nine years with Denmark’s big shipping conglomerate, Maersk. As chairman and later partner at Nordic Eye Venture Capital, he led their first logistics technology investment in FreightBro. He decided that the best way to highlight this underserved sector was to launch his own specialized firm in this space, a statement from the firm said. 

Although the global economy has expanded rapidly since the 1980s, Tradeworks.vc said that logistics suffer from under-investment when set against e-commerce. “Logistics is still seen as a black box for many VCs, who currently focus on last-mile operators and digital freight forwarders,” the firm said.

“The sector is at the bottom of the digitalization S-curve, with a long tail of small businesses ready to embark on their digital transformation journeys. The high labor, capital and energy intensity that characterizes logistics industries, provides significant potential for improving productivity and efficiency, and generating attractive VC returns,” Holck said.

One of the groups backing the venture is Oracle VC. Tom Whitby, chief executive of Oracle VC, said: “Niklas has identified a blue ocean with huge potential that is currently underserved by venture capital. The trade and logistics ecosystem will benefit enormously from the upcoming industrial-led economic recovery and Tradeworks.vc is well placed to take advantage.”

A major congestion problem at the ports of Los Angeles and Long Beach in California, accumulating over recent weeks, has led to longer lead times in shippers' supply chains, as ships sit at anchor longer and containers remain at terminals for days. The backups have grown as strong demand has persisted since the middle of summer 2020 because retailers started to restock inventories depleted in the early days of the pandemic.

As reported earlier in February (Wall Street Journal, February 6, others), some container lines and their importing customers are looking for alternate paths to get around bottlenecks at the main US trade gateways in southern California, where an armada of cargo vessels is anchored offshore at the congested seaports. Some shippers are moving to smaller ports. The supply-chain stresses are rising as a backup of ships waiting to get into the neighboring Southern California ports has grown beyond the number that were anchored during labor strife in 2014.