Startup Street: Changing The Face Of India’s Trucking Industry

This week on Startup Street, a new Deloitte report analyses how startups are re-moulding the country’s trucking industry through technology. The government throws a challenge to startups. And Microsoft announces a $6 million prize for women-led startups. Here’s what went on:

Disrupting The Road Logistics Industry

A number of Indian startups are taking on the challenge of organising road logistics. And in the process, they’re changing the industry dynamics of the largely fragmented sector.

That’s according to Deloitte India that evaluated the business models of startups in the freight trucking space. “They’re carving new channels, and meeting both existing and new needs of the historically under-served truck owner community,” Deloitte said in a recent report. “This has ramifications for anyone associated with this space—be it commercial vehicle manufacturers, auto ancillary manufacturers, oil majors, non-banking finance companies, or others.”

India’s logistics industry, slated to be worth around $160 billion, is an important cog in its economic machinery. Almost a quarter of the jobs in India are linked to it, with road logistics occupying the lion’s share, according to the Economic Survey.

Yet, Deloitte says, the sector riddled with problems. Entrenched interest of a network of middlemen and small operators has limited the free exchange of information between truck owners and operators. “Almost all parties, including truckers, transporters, retailers, and mechanics, complain of a ‘fickle ecosystem’, leading to an inherent trust deficit in the sector,” Deloitte said. “This results in inefficiencies in the way shippers’ demand for trucks is matched with supply.”

But tech-driven solutions by startups flush with fresh funds are changing that. “Digital freight-matching startups are disrupting how shippers find truckers, both for long-haul and last-mile deliveries.”

These startups are also making lives easier for truckers by aggregating the whole logistics ecosystem. A trucker can now source loads, get vehicle financing and insurance, purchase fleet cards and find mechanics all through a single tech-enabled platform.

Similar advantages are emerging for shippers who can now track deliveries in real time helping them optimise their warehouse operations and reduce inventory, Deloitte said. Besides, some startups are also using digital locks and geo-fencing to make shipments more secure.

That has earned investors’ confidence and their money. Freight trucking startups have raised over $500 million since 2014 with investment increasing 190 percent annually.

Investment has been across three key areas: long-haul transport, short-haul delivery and logistics software solutions. Established players like Rivigo and Blackbuck have been at the forefront of the investment wave, Deloitte said.

“As the logistics industry in India gears up for exponential change, legacy profit pools are up for grabs,” Deloitte said. “If incumbents may not respond on time, newcomers focused on innovating and solving the fundamental issues plaguing customers will eat into their profits.”

Challenge To Startups: Find Alternatives To Plastic

The government has launched a challenge for startups to develop an alternative for single-use plastic like bags, straws, bottles and food packaging.

The first winner will receive a cash price of Rs 3 lakh for each problem statement, while the second winner will get Rs 2 lakh. “The target of the single-use plastic grand challenge is to incentivise innovators and startups to develop design solutions,” the Department for Promotion of Industry and Internal Trade said.

The challenge is open to all startups. The product should at least be in any of these stages—minimum viable product, proof of concept or a deployed solution which requires further scaling up.

An interim jury of experts will review the eligible applications and shortlist the best entries on the basis of an evaluation criteria as set by the DPIIT. The result will be announced on Oct. 31.

Microsoft’s $6-Million Prize For Women-Led Startups

Microsoft’s venture fund M12, Mayfield and Pivotal Ventures on Thursday announced the second global Female Founders Competition that will award four startups a total of $6 million (about Rs 42 crore) in venture funding.

The competition aims to accelerate funding for women entrepreneurs developing business-to-business software-as-a-service and deep-tech solutions, a statement said. Eligible women-led startups developing enterprise tech solutions in U.S., Europe, Israel and India can submit applications beginning Oct. 17.

“Four winning companies will receive a total of $6 million in venture funding, along with access to technology, resources, mentoring and other benefits,” it said.

Peggy Johnson, executive vice president (Business Development) at Microsoft, said last year’s competition had helped highlight that there are innovative female entrepreneurs developing enterprise tech solutions, and they just aren’t getting equal access to capital.

“The tech industry can’t afford to keep leaving women’s good ideas on the table. We need to level the playing field for female entrepreneurs, and together with Mayfield and Pivotal Ventures, we aim to do just that with our second Female Founders Competition,” Johnson said.

Companies will be eligible to apply if they have at least one female founder, have raised under $5 million in combined equity funding and/or debt loans, and their product, service or platform addresses critical business problem for a global market.

A live finals pitch competition will take place on March 18-19, 2020.

Two enterprise software startups will earn investment awards of $2 million each, and two deep-tech startups innovating through substantial scientific and research advances will earn investment awards of $1 million each.

With inputs from PTI