Sailing through the supply chain crunch
Voyager Portal, a tech start-up that evolved from an IMD MBA summer research project with an aim of simplifying shipping, has raised nearly $10 million in funding from venture capitalists and other investors.
Over the past 18 months, the disruption wrought by the COVID-19 pandemic has exposed the fragilities in the global supply chain to everyone who has had to wait months for a new car or found the supermarket shelves devoid of toilet paper. For Matthew Costello, MBA 2017, these faults were already obvious four years ago.
In 2017, he invited his friend and now co-founder Brett Smart to Lausanne to help him conduct a deep dive on the maritime industry as part of his summer research project. Having both worked at chemical tanker operator Stolt Nielsen, the pair tapped their contacts and surveyed over 100 people on the pain points, which included frustrations around fuel, the penalties levied for waiting too long at ports, and the way different players in the industry work together.
Business plans on butcher’s paper
They came up with more than 20 business ideas, which they mapped out onto large pieces of butcher’s paper. Then, in true MBA-style, they calculated the market size for their ideas and put them on an ease/value matrix to work out which ones would deliver the most value quickest. The pair settled on creating a single supply management platform that allows companies to coordinate shipments and Voyager Portal was born.
A major finding from the survey was that companies were often coordinating complex shipments via email, spreadsheets, and PDFs. “We found that about 40% of people’s time was spent on low value, low complexity work,” said Costello.
“I was astonished to hear from Matthew how far behind the shipping industry was in adopting information technology,” recalled Ian Charles Stewart, serial entrepreneur and Executive in Residence at IMD, who heard Costello’s research project presentation. “I made a couple of calls to verify what he was saying and quickly realised he had a real opportunity. Even if I wasn’t sure that the service he was proposing to start with would be the one that took off.”
It turns out Voyager Platform’s supply chain management platform, which makes it easier for customers to manage the workflow around moving cargo, came at just the right time. While the shipping industry was slow to catch on to digitalization, the turbulence caused by clogged ports and overwhelmed supply chains exposed the need to invest in technology and data to make sure shipments flowed more smoothly.
The Houston-based company grew quickly throughout the pandemic and now manages more than $1 billion of freight on its platform with customers in the renewable energy, petrochemicals, offshore and Oil & Gas sectors in the United States and Europe.
“From a technology standpoint it made everyone realize how little data they had to understand their business at the edge of what is possible,” said Costello, adding spending on technology by industry players has more than tripled.
Reeling in investment
Its success caught the attention of investors. Having secured $1.5m in seed funding from ATX Venture Partners, Blue Bear Capital and GreenHawk Capital, it racked up a further $8.4 million in a Series A investment round led by Oman-based venture capital firm Phaze earlier this month.
Voyager Portal plans to use the funding to expand its sales and marketing efforts in Europe and Southeast Asia and expects to more than double in size to around 50 staff by the end of next year. Its ambition is to not only help ease collaboration between shipping companies, freighter and brokers, but also to help analyze data and trends to predict what might happen to shipments.
With shipping accounting for around 3% of global greenhouse emissions, there is growing pressure on the industry to reduce its carbon footprint. Costello said Voyager Platform’s workflow engine allows customers to track the emissions data of their maritime shipments.
In the future, this will enable customers to benchmark different suppliers according to their emissions and source greener transport by selecting carriers with a lower footprint or shorter transit times.
Top tips for entrepreneurs
Costello chose IMD for his MBA because of its deep connections with the shipping industry. Both Søren Skou and Søren Toft, the CEOs of Maersk and MSC respectively, both completed their MBAs at IMD.
As well as giving him the bug for entrepreneurship, IMD offered support in the early days of Voyager Portal by including the company in its annual Startup Competition.
For anyone considering taking the leap and starting their own business, Costello has the following advice:
- Pick your founding team with a lot of care and thought because you are going to be with them for life; don’t rush that decision.
- Start somewhere small and niche where you can quickly figure out if it’s a good idea and reduce the decision cycle and feedback loop to as short a period as possible.
- Just jump off the deep end and do it! The reality is you are going to have to take some really big gambles. Unless you are all in, it’s hard to do it properly.