Funding for logistics start-ups tightened in 2022. Where are investors focusing their interest now?
After surging in 2021, funding for logistics start-ups slowed substantially in 2022. Among the causes of the slowdown: a more challenging macroeconomic environment coupled with a decline in the growth of e-commerce. Investment in logistics start-ups fell by nearly 50 percent year on year, with the steepest drop occurring in the year’s second half as higher interest rates took a severe toll on venture capital activity.
Our June 2022 article “Start-up funding in logistics: Focused investment in a growing industry” examined the 2021 boom, when funding reached an all-time peak for the sector. This article explores the more recent deceleration, while offering a granular view of funding shifts within industry subsectors.
Our analysis is based on a sample of roughly 600 logistics start-ups accounting for more than $90 billion in funding. We analyzed funding by industry and region, with an eye toward changing marketplace dynamics.
Investment in logistics start-ups in 2022 fell by nearly 50 percent year on year, with the steepest drop occurring in the year’s second half.
Funding for logistics start-ups dropped by half in 2022
After growing more than 70 percent per year beginning in 2014, funding for logistics start-ups reached an all-time high of $25.4 billion in 2021. It appeared the following year might bring more of the same when February 2022 saw a $935 million funding round for the logistics technology start-up Flexport (bringing its valuation to $8 billion).1 But this early promise proved illusory. By the end of 2022, funding had fallen by 49 percent year on year. The eventual total of $12.9 billion still exceeded the totals for 2019 and 2020, but it was a notable departure from the explosion in funding that marked 2021.