DB Schenker, one of the world's largest logistics service providers, is opting - in the midst of the Corona pandemic - for a rather progressive approach in the logistics industry: the combination of investing and building its own ventures.
At a time when supply chains are complex and customer expectations are higher than ever, DB Schenker relies on true entrepreneurship to help shape innovation for the future. Together with MVP Factory, the first Corporate Venture Studio model in Germany is being created, combining the advantages of corporate venture building and corporate venture capital.
In August 2021, logistics giant DB Schenker decided to take a decisive step together with MVP Factory, laying the foundation of a remarkable partnership: With "Schenker Ventures", a unit for venture capital investment in start-ups was launched.
By combining investments and the founding of early-stage companies, DB Schenker aims to promote innovations to drive progress in the logistics industry and strengthen its own market positioning. A Venture Studio, as a subdivision of Schenker Ventures, plans to create a broad portfolio of start-ups in various growth markets of the logistics industry by 2025.
Large parts of the logistics industry are still supported by personal relationships. Like other sectors, the personnel situation is strongly influenced by the shortage of skilled workers and the incipient retirement of the boomer generation from the labor market - the ecosystem is facing massive change.
"Based on this assumption, we must succeed in transforming a very stable corporate and business model into a more flexible organization that is even better able to tap into new opportunities. We want to be prepared today for everything that will result from future megatrends," says Patric Hoffmann, Head of Schenker Ventures.
DB Schenker was already successfully digitizing its core processes but had soon realized that innovation is needed beyond the core organization.
The founding and co-financing of various start-ups and the associated promotion of innovation is an important strategic pillar for actively shaping the future of the industry. Jochen Thewes, CEO of DB Schenker, classifies the approach: "We want to be the driving force of innovation in the logistics industry and shape the future in a digital and climate-friendly way. With Schenker Ventures, we have opened a fresh chapter to unleash new ideas."
What we did
First, the MVP Factory team analyzed the existing venture studio landscape. Since IdeaLab was founded in 1996, numerous venture studios have established themselves on the market - studios such as Picus Capital, Atomic, or Atlantic Labs work closely with founders and combine elements of start-up incubation with investments.
Through this in-depth analysis of the most successful studio models, as well as the survey of VCs and founders, MVP Factory developed a unique venture studio setup tailored to a corporate group. The resulting start-ups benefit from access to DB Schenker's assets and MVP Factory's entrepreneurial and technical experience. Compared to traditional approaches, the Venture Studio method delivers 44 percent better results when it comes to the success rate of the start-ups and 84 percent of the startups that emerge from the studios make it to the seed round (Zasowski and Hayton 2022).
This combines the best of two worlds: a vertical venture studio with a corporate partner. The portfolio approach minimizes DB Schenker's risk and allows it to build ventures that are far from its own core business. It is the ideal setup to create a long-term competitive advantage in logistics and to support the company's growth strategy. At the same time, entrepreneurial freedom is optimally combined with the strengths of an established global partner. Patric Hoffmann emphasizes: "Great ideas need entrepreneurial freedom. That's why founders need to retain control over their company. To achieve this, we wanted to create an environment in which they remain owners and have full strategic freedom."
Schenker Ventures' Venture Studio consists of a structured process with four phases and three clearly defined stage gates. These are check-ins with the DB Schenker Venture Board, consisting of the CEO, CDO, and CFO where they check the relevance for the logistics sector and ensure the financing of the start-up ideas. The overarching goal - to develop as many innovative solutions as possible for relevant challenges in the logistics sector, thus building a broad portfolio that ensures the best possible risk-reward ratio.
Over 150 founders were interviewed to ensure a pool of suitable entrepreneurs for future venture projects. On the basis of 45 validations of different ideas, these were tested for feasibility and viability. As a result, several teams of founders were recruited and the first rounds of financing with external investors were acquired for start-ups.Together with DB Schenker, MVP Factory manages the Venture Studio operationally.
"We accompany the entire process from idea generation to founding. We look for suitable founders, build the MVP, and support fundraising. In this way, we not only provide advice but also actively implement projects" says Philipp Petrescu, CEO and Founder of MVP Factory.
Value delivered
Together with DB Schenker, Germany's first corporate venture studio was created, combining the best of two worlds: a vertical venture studio with a corporate partner.
It is worth noting that DB Schenker's Venture Studio was launched at a time of unprecedented upheaval in the logistics industry, cementing the company's position as a true innovator in the sector. The Venture Studio is already proving its value with six start-ups in different problem spaces. For example, one of these start-ups provides financial services to EU freight forwarders, creating financial flexibility and stability in a difficult labor market. Through this solution, drivers receive their payment as soon as 48 hours after completing the job, rather than after three weeks.
Another start-up is developing a platform for dynamic planning and coordination of transport flows at the interface between warehouse and transport logistics. This gives stakeholders complete transparency and enables them to make better decisions through real-time data.
"MVP Factory is enormously execution-driven," says Tobias Ledermann. "While many consultancies only focus on concepts and show their results on fancy slides, for MVP Factory this is only the starting point. It's about really implementing something together and getting it on the road. The team has founded start-ups themselves which means that they know how it really needs to be done and have a strong network to make the projects a success."
DB Schenker shows what is possible when you face current challenges with courage. "With the Venture Studio model, the company has not only taken a very innovative step but has also built a real partnership. Together, DB Schenker and MVP Factory are revolutionizing the logistics landscape from within" says Johannes Simon, Managing Partner at MVP Factory.
MVP Factory is extremely execution-driven - while others focus on conceptualization, this is just the starting point. Their focus is on real execution, taking business to the streets, winning customers, investors, and more. This makes MVPF a great partner to establish true entrepreneurship.
The humans behind this project
