VCs and PEs fueling deck (reporting) and engine (optimizing) coming together

Many observers have compared 2021-2022’s developments on the maritime start-up front (we’re talking service provider here) to the dotcom boom of 1999-2000; I’m not so sure that these apply. At some point in late 2000, the boom turned out to be a bubble, or-pick your metaphor, a collapsing balloon. As start-up activity, broadly, has hit the pause button in 2022 (compared to 2021’s exuberance from VCs- who fund early-stage companies, and PE investors- who would bolt on to operating businesses with growth potential), it’s worth taking a look at activities in the maritime “space”.

Perhaps the actions of companies who been on the voyage for awhile might provide clues of things to come. Earlier this year, Veson Nautical- a ship management platform that has been around since the early 2000’s, announced that it had acquired Q88- a leading repository for vessel-specific information supporting chartering and in-port operations, especially for tankers. There are some great traditions here; the Veson side goes back to the early days of personal computers in the 1980s (with some Microsoft interaction along the way), while the Q88 side is steeped in tanker practice back to the same timeframe with some rocket science thrown in. Earlier, about a year ago, Veson had acquired a provider of vessel tracking information and analytics, Oceanbolt, with its capabilities now tied into a much broader package.

Another deal that caught my eye, also from very early 2022, saw ZeroNorth, another AI-fueled “optimizer” (which came out of Maersk Tankers, later joined by Cargill and then a PE provider- PSG Equity) acquire a bunker supply platform (supplementing existing analytics)- with intelligence capabilities built in. Then, more recently, a “collaboration” (not an outright merger) was announced between Nautilus Labs (an “optimizer” with Greek shipping in its bloodline) and OrbitMI (a “reporter” which was developed within the Stena sphere and then spun out as an independent company). Both of these businesses have been around for awhile (though not the decades of the Veson-Q88 pairing).

While the various press announcement of these deals contain far too much tech-speak for my dinosaur mind, they point the way towards how maritime “computing” might be evolving. Venture capital funding has already fueled some of the company developments along the way. Right around the time of the Q88 acquisition, Veson Nautical announced that it had received funding from Francisco Partners, augmenting earlier funding from Pamlico Partners. Microsoft’s funding of Nautilus Labs, actually in two different tranches during the past year, has been widely reported in the shipping media.

The pathways of various optimizers has shifted dramatically from the 2019-2020 timeframe (when it was all about reducing fuel costs) to 2022 (with decarbonization clearly the name of the game). One important catalyst for the cooperation trend is almost certainly the Carbon Intensity Indicator (CII) regulations set to come into effect at January, 2023. A whole plethora of companies beyond those mentioned above (we’ll save them for another articles) are in the businesses of actually measuring CO2 emissions, while others offer elaborate simulations and “what ifs” which will tie CO2 and then CII to various patterns of vessel operations and choices of cargoes (or not); sometimes ballasting works better.

While predicting the vagaries of VCs and PE is right up there with trying to forecast freight rates and vessel asset prices, it is a pretty easy bet that outside investment will likely come to the new generation of shipping information providers. “Shipping” and “supply chains” awareness has been raised, so the spotlight is shining in our direction. This will continue; even as containers are out of the news, LNG, crude, and refined products will be moving, if they haven’t already, to the front pages/ top of the fold/ etc.  Potential acquisition targets ought to think carefully in plotting growth trajectories- which may include looking around for partners, likely with some shipping pedigree, making themselves more attractive to financial investors.