The founders of Chattanooga-based Dynamo Ventures have raised $43.2 million for their next round of investments in logistics startups around the world, thanks in part to supply chain challenges during the COVID-19 pandemic.
"We no longer have to explain the importance and relevance of supply chain and supply chain technology," said Santosh Sankar, a co-founder of Dynamo. "Prior to the pandemic, people asked, 'What is this thing, why are you doing this?' We no longer have to answer that question."
Launched in 2016 with $18 million in funding, Dynamo focuses on supporting startups dedicated to solving the massive, complex puzzle that is supply chain logistics in an increasingly global and technology-driven world.
"When we started in 2016 with our first fund, it wasn't quite clear that we could build a big giant franchise supporting technology and innovation in supply chain," Sankar said. "But as [limited partners] studied us on a quantitative basis, even though it's very early, we have a fund that is a top 5% performer as it compares to other funds raised in 2016 focused on seed stage investment."
Dynamo co-founders Barry Large, Ted Alling and Allan Davis launched Access America Transport in 2002 in Chattanooga. Access America became one of the city's most successful startups, with sales of about $600 million in 2014. That year, Access America was acquired by Coyote Logistics of Chicago. About a year later, Atlanta-based giant UPS acquired Coyote Logistics for about $1.8 billion.
In 2010, six years before they created Dynamo, the Access America founders established the Lamp Post Group, a startup incubator that became a launch pad for businesses including BellHop, Fancy Rhino, Steam Logistics and Reliance Partners. Because Dynamo is driven by entrepreneurs, the fund has a clear vision of its goals, Sankar said.
"Ultimately, our job is to be in service to the founders we choose to participate with," he said.
Dynamo has investments in more than 30 startups around the world, but has also invested some of its first funding round locally. Steam Logistics, an international freight logistics firm born from Access America, and Workhound, an employee engagement platform that moved operations from Iowa to the Scenic City in 2016, are both part of the Dynamo portfolio.
"The thing that we are very keen on is supporting the right team tackling the right opportunity wherever they are," Sankar said. "If it happens the next investment is here in our backyard, that's great."
While Dynamo is geography-neutral when it comes to where they invest, the fund that was named to pay homage to Chattanooga's industrial history as the 'Dynamo of Dixie' is rooted in the city, Sankar said.
"When you look at the Chattanooga region, there is not a stronger region in the country when it comes to supply chain knowledge and understanding," he said.
From trucking stalwarts U.S. Xpress and Covenant Logistics to global manufacturers including Volkswagen, Chattanooga has a rich range of expertise and history in the logistics industry, he said.
Contact Mary Fortune at mfortune@timesfreepress.com. Follow her on Twitter at @maryfortune.