Carbon neutral global supply chains are a crucial but often overlooked key to tackling the climate crisis; just eight supply chains account for over 50% of global CO2 emissions, and decarbonising is economically viable, adding just 1-4% to end-consumer costs for many everyday products, according to a World Economic Forum report.
This opportunity to slash supply chain emissions starts with great logistics, but the logistics industry is a notoriously unwieldly giant. Supply chains are long, dense and opaque; many processes outdated, involved and very specialist. This wastes fuel, resources and materials on an industrial scale; transport-related greenhouse gas emissions are responsible for more than 27% of the EU’s carbon footprint, and the European Transport Agency cites that 21.7% of road transport emissions were from heavy-duty trucks, outlining the massive scale of supply chain impact on our global CO2 footprint.
Logistics may seem like an intimidating industry for some investors – a flailing megalith with its feet still firmly planted in a bygone era. But “if you squint hard enough, an entirely new logistics paradigm is coming into view,” McKinsey predicts in a report. It’s this new paradigm, coupled with the acres of untapped potential for improvement, that gets Matthias Friese – Managing Partner at Berlin-based investor and company builder Xpress Ventures – out of bed in the morning.
XPRESS Ventures aims to be co-founder, co-investor and partner to logistics startups looking to sustainably improve the industry and tackle the pressing waste and sustainability issues along the supply chain. The XPRESS Ventures approach is to think like VCs, to have their expectations aligned with VCs in order to help secure investment rounds, but – thanks to their partnership with Fiege Logistics – to also command knowledge, access and experience at an industrial level.
Log-tech startups today face a veritable swamp of challenges, not least a slumping economy both in Europe and globally, uncertain conditions for many global supply chains and risk-averse investment attitudes. Specifically, investment deals concluded in climate technology declined by 15% in 2023 compared to 2022, according to BNEF’s Climate-Tech VC/PE Investment Database. Similarly, PwC’s fourth annual state of Climate Tech report stated that “geopolitical turmoil, inflation and rising interest rates have set climate tech investment back to the level of five years ago.”
The price competition is tough and energy prices are high, particularly impacting direct logistics solutions. Ole Poppinga, Venture Architect at XPRESS Ventures also cited high entrance barriers to the market as further challenges facing startups. In Germany, the sector tends to be dominated by a few very large players – who require a lot of persuading to invest – as well as outdated, clunky and complex software systems.
Add all of this together and it’s painting a gloomy picture of the logistics industry. But Friese sees it as fertile ground for big, sweeping improvements and, above all, an opportunity for savvy entrepreneurs and investors to make real change. In spite of all the challenges they face, says venture architect Ole Poppinga, “if start-ups tackle big problems – hard problems – with true tech, I think they still have good odds.” XPRESS Ventures is particularly interested in these ‘true tech’ solutions, championing genuinely high-tech software and hardware solutions for the climate crisis in the logistics sector.
Climate tech solutions XPRESS Ventures has backed include Logistikbude, which provides an innovative software infrastructure for efficient reusable system management, helping businesses reduce personnel and infrastructure costs. Their digital solution enables up to an 80% reduction in personnel efforts, and a 40% decrease in replenishment costs. PaketConcierge, which helps people choose out-of-home delivery pick-up points as a matter of principle, generating huge pooling effects in last-mile delivery. They have processed more than 40.000 packages and their carrier partnership model ensures a scaling potential of up to 340,000 pick-up points in Europe alone. And HomeRide, a RetailTech-Startup which runs a local commerce D2C-marketplace. By connecting local retail inventory and climate-neutral last mile delivery service in one digital place, HomeRide provides the next generation of on-demand consumer services. Consumers can place across multiple local stores and get them delivered the same day at a desired time. They only use electrically powered cargo bikes to collect and deliver purchases.
When asked about the climate tech trends on the horizon for 2024 and beyond, XPRESS Ventures are clear that they’re hoping to see “software that can go deep into supply chains and identify potential”. Gartner echoes this sentiment with its 2024 supply chain trend report, where the headliners include end-to-end sustainable supply chains, supply chain data governance and AI-enabled vision systems. Friese is always keen to highlight that the speed required for changes is too high-paced for the large and unwieldy logistics industry. That’s where his company ethos comes in – uniting a VC mindset with logistics expertise, and investing in “founders, not in ideas.” “So many people have good ideas,” Friese says, but to execute these ideas, you need to understand the challenges and problems your customers face and always be looking to the future, at an appropriate pace. He cites break-neck schedules from ideas through to pre-seed, funding rounds and beyond as the pace of innovation required to turn the tide.
In a time when hope can feel somewhat thin on the ground for climate solutions, the XPRESS Ventures colleagues remain climate optimists. Hope and momentum from climate techs investors is desperately needed to counteract the recent decline in investment in climate tech. “The world needs to decarbonise seven times” faster than the current pace, according to PwC. Logistics and supply chains have a substantial role to play in global decarbonisation and even small efficiencies can create massive impact with scale and time.
The XPRESS Ventures team says it wholeheartedly believes in “market-driven solutions” and “the power of entrepreneurship.” The climate tech market, they say, is rapidly growing and will become one of the biggest markets – not to mention the most urgently needed – so it’s bristling with potential returns. This alone should be enough to encourage big investors and some of the richest global players to back climate tech, says Friese – if not the knowledge that they’ll need to, for the sake of their children and future generations.
