SMEs Hold Vast Power in the Race to Sustainability

Has supply chain disruption caused your company to change the way it does business?

Yes

59%

No

39%

Other

2%

10 0 20 30 40 50 60 70

for optimization and supply chain management solutions has accelerated their implementation. “Advanced robotics is one vertical that we all knew was a possibility but which has been a surprise in terms of how quickly it’s come front and center in the industry. Robotics is transforming warehousing as more and more businesses adopt and innovate and embrace the concept of using autonomous robots to fulfill orders,” says Houlihan Lokey’s Kaiser.

Middle-market companies’ rush to streamline and update their supply chain technology has attracted the interest of investors as well.

“Any time there is a breakdown in the system, that creates an opportunity for investors. That’s what we’re seeing in the middle market and lower middle market where there has been a flood of financing volume,” says Kaiser. “With highly fragmented market participants, there’s a strong investment thesis for new entrants looking to fill in gaps and address the pain points that the broader supply chain ecosystem is facing.” Some legacy incumbents have been slow to adopt new technologies, creating a huge opportunity for startups to enter and displace their models.

The numbers support this hypothesis. Investment in the mobility, logistics and supply chain technology sector has been sky-high. The $31.1 billion financing volume in Q1 2021 represents a more than 180% increase from 2020 levels, while $39.1 billion in M&A activity in Q1 2021 puts the sector on track to surpass the $106.3 billion in 2020, reports Houlihan Lokey.

“The industry is on track for an alltime high as it relates to acquisition from PE-backed and strategic companies,” says Kaiser. //

We’ve had big media hits that would have been huge acquisition opportunities for us that we weren’t able to capitalize on because we couldn’t guarantee getting our product to new customers in a timely manner.

Ryan Baylis

CEO, Drift