As stated in our latest blog post, Supply Chain Visibility is one of the hottest topics in modern days’ supply chain management. and project44 is one of the leading software vendors in that space. Pushed by political initiatives like Germany’s Supply Chain due diligence act and the EU’s move towards a new supply chain transparency legislation, more and more companies are either forced to take action and control of their Supply Chains or do it of their own free will as they develop awareness either of the ethical or the financial impact of transparent and therefore predictable Supply Chains. Whatever each firm’s individual motivation is, Supply Chain Visibility is on the rise.
One player in that field caught our special attention over the last months and that is project44. Although our research usually focuses on European Startups, project44 as an US-company is still an interesting case to look at. It has not only acquired two European Companies over the last years and shown a growing interest in continuing its M&A activities over the last months, but also set a great example for a (so far) successful inorganic growth strategy. But let’s take a step back first and see how it all started.
The origins of project44
project44 is headquartered in Chicago, Illinois, United States and was founded in early 2014 by Jett McCandless and Wally Ibrahim. While the latter being the CTO at project44 left the company in 2016, Jett McCandless is still on board in the position of the CEO. While project44 was founded with the vision of fully transparent Supply Chains, its beginnings were narrowed down to less-than-truckload (LTL) shipments. While project44 raised its first major funding round in 2016 totalling 10.5M USD led by Emergence it took project44 until 2017 to introduce full truckload capabilities and rail to its visibility platform. Today, project44 seems fairly close to the vision of real end-to-end visibility of the entire Supply Chain from raw materials to consumers including tracking & ETAs, condition monitoring, order and inventory visibility, workflow automations, analytics and supplier visibility across all transportation areas from ocean freight till last mile. Its advanced Supply Chain Visibility serves customers around the globe, e.g. Sennder, FedEx, COOP, amazon, Lenovo, REWE; Bosch, ExxonMobil and others. In May 2021, project44 announced it had passed the 50m USD ARR mark. By then, Project44 had raised a total of 374.4M USD according to crunchbase data and thereby attracted high caliber investors like Sapphire, Insight Partners or Goldman Sachs Asset Management. In 2021, project44 acquired 3 other Supply Chain Visibility companies but its M&A activities already began in 2018. In the following paragraphs we will analyze all acquisitions and build a hypothesis about the underlying strategy.
Step 1: Setting foot in Europe
Horizontal acquisition of GateHouse Logistics by project44.
In October 2018, the Danish Supply Chain Visibility provider GateHouse Logistics and project44 announced an exclusive partnership. Since 1992 GateHouse Logistics has focused on aggregating position and sensor data for truckloads and securely sharing data across the Supply Chain. An interesting point in a cooperation for a non-european partner might have been that all data sharing services of GateHouse Logistics were fully GDPR compliant. In December 2018, it was announced that project44 had acquired its former European competitor and then partner. From our perspective that step benefitted project44 in two essential ways.
Firstly, it allowed project44 to quickly establish a presence in Europe, which might have been the case and would have been more difficult otherwise for the following reasons:
- – different legislation and stricter data protection laws (GDPR) in Europe
- – established connection to telematic infrastructure and data processing capabilities
- – access to GateHouse Logistics’ shipper network (that was probably better established in Europe as well)
Secondly, as also indicated by the last of the three previously mentioned points, it allowed project44 to benefit from network effects: a better shipper network with better connections to telematic infrastructure in a new geography allowed project44 not only to establish its presence in a new geography but also build a better, deeper integrated product.
Like all other following acquisitions, GateHouse Logistics was fully integrated in project44’s brand and did not sustain its brand.
Step 2: Enhancing upstream know-how
Vertical acquisitions of OceanInsights and ClearMetal by project44
1. OceanInsights: covering additional parts of the chain
Fast forward to March 2021, project44 announced not only one but two acquisitions. While GateHouse logistics was an acquisition of an established competitor with a very similar market hypothesis in another Geography, OceanInsight had a narrower approach, focussing only on one aspect of Supply Chain Visibility: Ocean & Sea Freight Tracking.
Founded in 2012 in HongKong and later moved to Germany, OceanInsights provided two essential things to its customers:
- 1. consolidated container sailing schedules allowing comparisons between different lines
- 2. container tracking via satellite data
While OceanInsights had a good international Network due to its own international founding story, its focus and value proposition seemed too narrow, only covering a short part of the chain.
From an external point of view, the rationale for project44’s acquisition of OceanInsights seems pretty clear, taking into consideration both that project44’s main expertise originally was in road freight and the geographical experience of OceanInsights:
- – taking another step towards end-to-end visibility by strengthening its expertise in other areas of transportation.
- – making use of OceanInsights direct and well established connections to international shipping lines
- – growing its coverage of the chain in South East Asia where OceanInsight was initially founded and which is a critical part of (sea freight) Supply Chains
2. ClearMetal: covering additional parts of the chain + strengthening the IP
Also in March 2021, project44 acquired ClearMetal, an AI platform for upstream supply chain allowing transportation planning and better customer service through the generation of live information about shipments. ClearMetal was founded in 2014 and according to crunchbase information had raised 31M USD before it was acquired. Interestingly enough, it’s last funding round of 19M USD led by Eclipse Ventures was completed just one year prior to the Acquisition.
From project44’s standpoint, taking into consideration the ClearMetal’s team’s strong technical background, there might have been three rationales behind the acquisition of ClearMetal:
- – getting access to ClearMetals superior data analytics capability with its patented machine learning algorithms
- – hiring multiple experienced data scientists and software engineers at once
- – furtherly enhancing its Ocean Freight expertise
While the first two mentioned points may seem rather obvious looking at ClearMetal’s positioning as first and foremost a solution “making sense of Supply Chain data” – in other words: analyzing it with the help of machine learning and generating actionable insights – taking a look at its most recent announcements right before the acquisition reveals the third potential motivation: in September 2020 ClearMetal announced joining the SAP Logistics Business Network and as an SAP Partner providing global integrated ocean tracking. In February 2021 Unilever and ClearMetal announced the creation of Unilever’s “Virtual Ocean Control Tower”, a Supply Chain Visibility tool that connects 25 shipping lines, using satellite data to track more than 2,000 vessels and 400 ports, as well as hundreds of raw and pack material suppliers.
Both transactions combined significantly increased project44’s footprint in Ocean Freight and allowed a technically feasible growth at the same time. Like GateHouse Logistics before both OceanInsights and ClearMetal are fully integrated into project44’s brand.
Step 3: Enhancing downstream know-how
Vertical acquisition of Convey by project44
The newest acquisition of project44 is Convey in September 2021. It’s also claimed to have been the biggest acquisition this year with a volume of 225M USD although the valuations of OceanInsights and ClearMetals were not revealed publicly. Convey, headquartered in Texas, USA, was founded in 2013. Prior to the acquisition it had raised 25,7M USD in VC money with its last round dating back to June 2018.
Unlike OceanInsights and ClearMetal, Convey focused on downstream visibility by using Supply Chain data to boost customer/end-user satisfaction. That includes predictive delivery, monitoring issues and being able to proactively communicate to customers creating a superior post purchase experience.
Keeping in mind that end-to-end visibility for the whole Supply Chain means not only monitoring Supply Chains from raw materials until the end of production but also beyond that including the last mile of delivery acquiring another well established player vertically covering exactly that last field seems a logical step when thinking about project44’s vision.
Right now, in the beginning of October, Convey’s Website is still live, stating “convey (by project44)”. Nevertheless convey is very likely to also brandwise be integrated into project44 like all other acquisitions before
There are multiple interesting points to look at in project44’s inorganic growth strategy. We want to highlight a few:
- Strategy defines growth and success: obviously GateHouse Logistics, OceanInsights, ClearMetal and Convey all had super relevant products (they would not have been acquired otherwise) with a good technical base and were on successful paths. What they all have in common is that they all were older (or in case of ClearMetal at least of equal age) and one would think for that reason better established than project44 and still got acquired by it. From our point of view project44 was only able to do so, because it picked the right part of the Supply Chain to start with its vision of end-to-end visibility, allowing it to attract significant amounts of venture capital and grow rapidly. Focusing on road freight first opened an already huge potential in project44’s home market, enabling it to build traction without the difficulties of cross border transactions, different legislations and too heterogeneous stakeholders.
- Even with the right strategy, market timing and momentum are key: One could argue that GateHouse Logistics had a similar strategy but should have had a first-mover-advantage. But when GateHouse Logistics was founded, the markets just weren’t ready. Firstly, the awareness of both the environmental and social impact and responsibility of Supply Chain Management and the economic advantages of superior Supply Chain Planning was just not deeply enough anchored in the key actor’s minds to allow a quick adoption. Secondly, the venture capital industry experienced great growth during the last decade (also with Europe being slower than the US) naturally benefitting younger, more agile companies with a shorter history and huge visions of growth.
- End-to-End necessary in Supply Chain Visibility: Except for GateHouse Logistics, all other players focused on just one part of Supply Chain. While that vertical “best of breed” approach works in multiple industries, Supply Chain is a horizontal topic by nature making also Supply Chain Visibility horizontal. Customers can only leverage the full potential of visibility with an end-to-end product. “end-to-end” means that a solution sooner or later has to fully cover at least one stream (upstream or downstream) if not the whole chain. Project44 implemented just that and first gained upstream-control by acquiring GateHouse Logistics, OceanInsights and ClearMetal and then expanded to a full end-to-end-approach by also enhancing its downstream expertise with the acquisition of Convey.
What comes next and where is the European champion?
We think Supply Chain Visibility will continue to be among the most important topics in the months and years to come and it will be interesting to see if project44 will keep up its M&A activities in Europe. A lot of great European startups focussing on the topic of visibility have emerged in the last few years and venture capitalists have recognized the opportunity. Battery Ventures’ investment into the French company Shippeo might only be the starting point for creating a European champion in supply chain visibility. As said earlier Supply Chain Visibility is a horizontal product and as such the existing partial solutions need to be consolidated to get the full view. This might be done by corporates through building their internal control towers or it can be achieved by creating a sophisticated, well rounded offer from a technology company. In any case we would expect that the future holds more M&A transactions in that space to realize the full potential of the individual offerings.