Supply chain logistics -- getting components and eventually finished products from A to B to C -- is one of the most critical parts of running a business, not least because it is one of the most complex, involving dozens of companies, hundreds of combinations and permutations, accounting for world events outside of your business, a lot of people hours to figure it all out. Today, a startup called 7bridges that is aiming to simplify that by way of an AI-based automation platform -- it ingests a company's supply chain, operating and logistics data to present a user with optimized recommendations for how to move goods -- is announcing $17 million in new funding, a sign of the demand in the market to address and fix how supply chains work.
Eight Roads, the investment firm backed by Fidelity, is leading the round for London-based 7bridges, with Local Globe and enterprise VC Crane, which both invested in 7bridges' seed round in 2020, are also participating. Shipping behemoth Maersk, by way of its fund Maersk Growth, is also in the round as a strategic backer: Maersk will be working with 7bridges to integrate its logistics and shipping data into 7bridges to help Maersk customers manage their logistics more easily. Valuation is not being disclosed. 7 bridges has raised just over $20 million to date.
This Series A is coming after a strong couple of years of growth for 7bridges, which today provides tools to around 20 large multinational companies. As companies like Amazon have abundantly demonstrated, having a well-run logistics supply chain can be huge competitive edge. Philip Ashton, 7bridges' CEO who co-founded the company with Matei Beremski (CTO), said that this concept was already driving decent interest for 7bridges. Then Covid-19 happened.
"The pandemic presented a moment of realization for those companies that still had their heads in the sand," he said. "Having an adaptive supply chain is a business-saving issue."
The crux of the challenge (and opportunity) that 7bridges is addressing stems both from how supply chain business models have evolved over the years, and also world events. Supply chains and the movement of goods are two extremely fragmented spaces, made even more the case in the last couple of years. Covid-19 completely disrupted how many partners in a company's supply chain operated (if they continued operating at all).
At the same time, Covid-19 led to massive surges in demand for many businesses -- most obviously in areas like e-commerce but also any business that found itself getting squeezed as a result of disruptions elsewhere (eg a pharmaceutical company seeing more orders for drugs in part because others are making less, or just because people became more anxious for their health).
Typically a company might work with upwards of 30 different suppliers in the normal course of business, from those supplying components through to companies that might ship parts or all of your product around the world. Those partners typically will work within their own data silos, and some are far from embarking on their so-called "digital transformation" journeys. That is, there are a surprising number of companies in the wider world of business still using older, analogue, paper-based systems.
All the disruptions and older ways of doing things add up to huge inefficiencies. 7bridges cites data from McKinsey that estimates that 50% of logistics spend goes to waste, falling through the gaps in companies' models. At the same time, apparently there is an appetite to invest more to fix this: some 85% of supply chain executives said inefficiencies in their current systems were "a cause for concern."
All of these factors were some of what contributed to Maersk investing. "The last two years have drawn supply chains directly into the commercial spotlight," said Oliver Finch, investment partner at Maersk Growth, in a statement. "There is an urgent need to innovate in the sector and maintain access to goods we rely on. 7bridges have developed a novel technology solution to digitalise the design, management and optimization of supply chains. 7bridges will enable a wider range of businesses to better harness the power of data and AI to support commercial decision-making. We believe 7bridges has the potential to address a largely unmet market need and significantly improve companies' supply chains."
Indeed, with AI and automation making their way into every aspect of how business gets done nowadays, it was a no-brainer that a company would come along to build a platform to bring all of this together.
That's not to say that others hadn't tried before, but Beremski and Ashton said that a number of factors meant that efforts didn't get off the ground: either the timing in the market wasn't right (a critical mass would not come on board), or the technology still wasn't there.
"Companies had a crack at this 15 or 20 years ago, but awareness and technology just didn't match up," Ashton said.
"Now there are more compute resources, and the level of machine learning, the maturity of the systems and reinforcement learning and mathematical optimization, have really only emerged in the last three or four years," added Beremski. "Logistics is going through a digital transformation, which means that all the services within it are now available through APIs and are just more accessible." All that makes building a system like 7bridges', and getting customers on board, much more of a reality.
It's also helped that there have been a wave of other tech startups emerging to tackle other aspects of the logistics equation, plotting a course for more evolution in the space. They've included the likes of Flexport, Zencargo; a massive wave of last-mile delivery startups; ERP companies like Xentral; and those focusing on digitizing and defragmenting manufacturing capacity such as Xometry. All of these have laid the groundwork for yet more companies to come along and tackle other aspects in the space.
"Almost every shipper is facing significant supply chain challenges from rising costs and a changing regulatory environment, and lack the tools and know-how to navigate them," said Davor Hebel, managing partner and head of Eight Roads in Europe, in a statement. "7bridges is creating a new category of value optimization software for logistics which has historically only been a service available to the largest shippers from consultants. We are incredibly excited to partner with the 7bridges team as they look to scale the business."