Investors lose interest in supply chain tech as pace of onshoring quickens
Venture capital investment into supply chain focused technology has significantly slowed in the past few months, following a pandemic-era boom.
Startups around the world injected $3.3bn (£2.6bn) to the industry in the third quarter, down more than 77 per cent in comparison with the same months a year ago, according to data research firm Pitchbook today.
The number of deals in the supply chain tech space has also halved in the past three months.
As geopolitical tensions rise, a trend of onshoring and localising supply chains has swept the globe post-pandemic.
The pandemic highlighted the risk of a diverse and global supply chain, as Covid-19 fuelled disruptions led to rising costs for businesses.
Funding in supply chain tech had been boosted by Covid-19 restrictions, with businesses seeking to quickly ease some of their logistical hang-ups. Growing environmental concern has also boosted the sector.
“For several years we have been following a theme of reshoring and deglobalisation,” said David Jane, a multi-asset manager at London-based asset management firm Premier Miton Investors. “The trend has only become greater in recent years, most especially post the Ukraine war and renewed China/Taiwan tensions.”
“Whilst reshoring may make sense from a security of supply point of view, labour costs, regulation and energy costs mean it may inevitably lead to cost increases,” he cautioned.