What We Invest In
Do you fit our interests and focus?
October 12, 2020
This is Part 1 of our three-part series to provide founders with improved transparency about Dynamo Ventures and how we operate. Over the series of posts, we cover (1) what we invest in, (2) what our investment process is and (3) how we support founders and their startups post-investment.
Dynamo Ventures strongly believes that if we claim to be founder-centric, we need to put "our money where our mouth is" and make ourselves both more transparent about how we operate and also more accountable (more to follow).
In this initial post, we outline the types of startups we invest in: stage, sector, geography, typical investment size, and ownership expectations.
If we haven't been sufficiently clear around the process, please do call us out on Twitter, LinkedIn or by email (email@example.com). Your feedback would be welcomed (but please be gentle).
TL;DR - Dynamo Ventures is a supply chain and mobility investor, focused on pre-seed and seed-stage opportunities, and invests only in enterprise (B2B and on occasion, B2B2C) business models.
Dynamo Ventures is an industry-focused fund based on our experience, expertise, and network. The team is made up of Ted Alling and Barry Large who previously built Access America Transport, a logistics business that subsequently merged with Coyote Logistics and sold to UPS for $1.8B. Alongside, Jon Bradford and Santosh Sankar who have made 120+ early stage investments over the last decade.
To champion greater transparency, we have outlined below what we invest in (and what we don’t). We will continue to update this post to ensure that we reduce any ambiguity. For more detailed information, read on!
Dynamo Ventures is an industry-focused fund specializing in startups in one of two broad areas: supply chain (the movement of goods) or mobility (the movement of people). If a business does not check one of these boxes we are not the right investors for you. Given the background of the fund’s founders, we will always be slightly more biased towards the supply chain.
Dynamo Ventures thinks about the supply chain across the following five distinct areas that reflect the flow of goods from the “factory floor to the front door.” While this might be overly simplistic, it makes for an easy and relatable conversation.
- Factories, Facilities and Farms. We will invest in the support functions in a factory, facility, or farm such as procurement, safety and maintenance. However, we are highly unlikely to invest in production capabilities that would be very industry-specific. Portfolio examples include ChAI and a company in stealth focused on manufacturing workflow collaboration
- International Logistics. This includes all things related to ships and planes, containers, ports and airports, international freight forwarding, et al. Portfolio examples include Steam Logistics and Vector AI
- Surface Transportation. This typically includes all things related to trucks and trains, digital freight brokerage, autonomy, etc. Portfolio examples include Sennder, Gatik, Starsky Robotics, and LEAF Logistics
- Warehousing and Fulfilment. This includes warehousing and distribution optimization, warehouse robotics, inventory harmonization, and related functions. Note, this area has a significant overlap with factories. Portfolio examples include Stord, SVT Robotics and PlusOne Robotics
- Last Mile. This includes solutions for getting goods to a store/customer. Note, we don’t invest in B2C startups so we would not invest in a startup such as Doordash or Instacart; instead, we look for enabling technologies that help last-mile. Portfolio examples include nextmv, Manna Aero, and Skupos
It is worth noting that as freight moves towards the end user, capital flows in the opposing direction opening up new opportunities with FinTech such as trade finance or invoice factoring. Equally, IoT technologies can provide greater transparency and visibility of where goods are and their current status. This provides more granularity and data rich transactions from which innovative solutions can provide real time risk management - otherwise known as InsurTech applications.
Dynamo Ventures is technology-focused but agnostic to the type of technology a start-up leverages - it's about solving big problems with the right approach. As a relatively small fund, we are biased towards scalable software businesses (including IoT) rather than capital intensive hardware businesses.
On the mobility front, we leverage a very similar model to supply chain and segment mobility based upon distance travelled.
- International Transportation. This typically includes ships and planes. Equally, airports and associated port infrastructure would be within our interest area
- National Transportation. This includes inter-city transportation using rail, coach buses or automotive including enabling technologies for optimization, passenger experience or novel business models
- Regional and Local. We include within this segment buses and automotive - both shared and private, as well as other local public transportation services. Portfolio examples include Zeelo and Mobikit
- Hyper-local. This is the equivalent of last-mile in the supply chain and includes light rail, buses, e-scooters and e-bikes. Portfolio examples include Token Transit
Within mobility, we take an active interest in connected vehicles, electrification, and autonomy as well as enabling technologies that make them a reality (sensors, safety systems, design tools, etc). Furthermore, we are interested in the future of finance and insurance as it relates to mobility.
While we do not invest in B2C startups, we will consider B2B2C startups for investment.
Dynamo Ventures is an early-stage investor and our first investment is either pre-seed (pre-revenue) or at seed stage (early revenue).
For pre-seed investments, where the startup has minimal sales, we look for “founder market-fit” that often manifests itself in a strong pipeline of pilot or customer opportunities. Seed investments typically have significant recurring revenue (~$30K/month) with the team looking to scale their sales ahead of a Series A round.
We invest in enterprise business models (or B2B2C where B2B is the key sales channel).
Dynamo Ventures primarily invests in the US, but also invests overseas with a focus on Europe. At a portfolio level, roughly two-thirds of our investments are US-based and evenly spread across the country with the balance based abroad.
Note, when we invest overseas, we look to co-invest alongside great local investors who can provide support and knowledge about the market and help with localized investment nuances.
Dynamo Ventures invest between $250K to $1.25M which is typically between a third and a half of the total investment round (we will make an effort to keep this up to date as the market and fund strategy evolves). We also reserve funding for follow-on investments.
We can either lead an investment or follow. Typically pre-seed investments are made as a SAFE and seed investments are “priced.” Where we lead an investment we typically take a board seat.
We welcome cold emails and invite you to reach out to us at firstname.lastname@example.org with your materials and request for a meeting.
Read Part 2, How We Invest. What's Our Investment Process?