“The FTC’s final rule to ban noncompetes will ensure Americans have the freedom to pursue a new job, start a new business or bring a new idea to market.”
Arrive is eyeing regional twists as the summer season draws closer. Rates might leap over 10% in some spots.
A supply chain expert's analysis of the data reveals that as of January 2023, the drop-off was twice as deep as the last major dip in 2018-2019.
Santosh Sankar is a venture capitalist who has a wealth of experience investing in the supply chain space. He is a co-founder and director at Dynamo Ventures, a Chattanooga-based logistics and transportation-focused venture capital firm that invests in seed-stage and series A startups. In a recent interview with FreightCaviar, Santosh discussed how his firm values startups and his team’s approach to investing in the industry.
Before starting Dynamo Ventures, Santosh had two entrepreneurial stints, one in IT support and the other in media. Later, Santosh ended up working in a big investment bank, but five years in, he realized that entrepreneurship was his true calling.
“Part of my last role was to engage with private companies and VC backers. During this time, I realized I wanted to become a venture capitalist. I wanted to work with bold, visionary individuals who were smarter and more capable than me. I wanted to be a good partner and bring my strengths to the table,” he said.
Santosh shares his journey to becoming a venture capitalist and how he and his team approach investing in the industry. Santosh and his team began their journey after meeting his partner Jon Bradford. Jon was the one who defined the idea of Dynamo Ventures. After spending months talking with tons of experts in the supply chain and logistics space, the two laid the foundation for Dynamo’s success.
Santosh explains more about Steam Logistics: Steam doesn’t look like your traditional freight forwarding service because it relies on technology to automate everything. They can use technology to deliver better service. Steam has aligned the three parts of the supply chain, including international drayage and domestic brokerage, to create a unique value proposition that few people can truly deliver at scale. This is how they have become a venture-scale business.
Time is a precious resource for venture capitalists, as it cannot be scaled. While firms have scaled from tens of millions to billions over the past few years, partner capacity remains a bottleneck.
“I have a lot of fun. I get to spend my life meeting interesting people pushing and pulling on the status quo. It’s those situations that catch fire and build the next big thing. But it’s also a lot of hard work.”
Santosh explained how they engage with thousands of companies every year but only invest in a handful.
“Delivering bad news is probably what every VC hates. We say ‘no’ more than we say ‘yes’. But we have to stay confident in our process and perspective. If we make the wrong call, we have to have the humility to revisit it and make changes. We have a saying: strong opinions, loosely held.”
Has Dynamo ever been burned by a company misusing funds?
No, not really. Being the first investor in a business gives them a unique bond and trust with the founding team.
Even as businesses grow to over $100 million, they call on Dynamo for personal and business advice. Because of this, Dynamo tends to have close relationships with its invested companies. They’re able to constructively push back on spending and fund allocation if they ever see anything going in the wrong direction.
According to Santosh, ownership and the amount raised are the two main factors when valuing a startup in the seed stage. Pre-seed and seed-stage valuations are generally driven by these factors, with the founder’s ownership being a key consideration, as it is often diluted. For pre-seed startups, founders usually give away 15-25% of their business, which may be even higher for deep-tech startups. At the seed stage, founders typically give up around 20-25% of their business. The level of dilution at series A is similar to that of the seed stage.
Dynamo aims to lead seed rounds, taking anywhere from half to three-quarters of the round. They aim to own 12% to 15% of the company and take down $1.5 million to $2 million of the round.
“If it’s like autonomy, electrification, hydrogen, can we bring subject matter experts there?’ So, we are equally open to, ‘Hey, let’s bring these types of participants and thoughtfully because the pie will grow if they’re involved.’ And ultimately, if we grow the pie, I should still be better off even if I have a smaller piece at the end. That’s what venture is really all about.”
The venture capital world is constantly evolving, and Santosh says staying up-to-date with these changes is vital for investors and entrepreneurs. “It’s always a great time to start a business in an environment identified as being adverse or difficult. If you can get through those environments, by and large, you’ll succeed when things go well.”
If you wish to connect with Santosh Sankar, reach him on LinkedIn or by email at santosh@dynamo.vc.
Key trends in freight and shipping market of June 2023, with insights into spot market, carrier capacity, LTL sector and cross-border shipping.
Get the MC by subscribing to our Premium Plan.
Levity helps fast-moving 3PLs and freight brokers to do more with less by automating the most time-consuming and repetitive email tasks.
The impressive third-quarter surge in freight activity paralleled a 4.9% increase in U.S. real gross domestic product (GDP) during the same quarter.
Keep up with the freight broker world in 5 minutes. The fastest & most entertaining way to digest freight broker news.
