Why does Capstreet invest in transportation and logistics?
Capstreet sees opportunity because the sector is complex and its technology is fragmented. It wants to invest alongside businesses that solve those problems in a more integrated way.
Capstreet states its view this way on its What We Do page:
The complexity of the transportation and logistics sector and the fragmentation of current technology solutions create a rich environment for us to invest alongside innovative businesses that are seeking to solve these challenges with technology in a more integrated fashion. We target several areas within supply chain tech, including track and trace technology, TMS, WMS, e-commerce and omnichannel, procurement software, and supply chain analytics.
Fragmentation is the key word. When shippers and carriers use many separate tools, a company that joins them can win. Capstreet says it targets that kind of business.
The firm lists several areas, not one. That gives you room. A track and trace company, a warehouse system vendor and a supply chain analytics firm can each read the list and find themselves in it.
What kinds of transportation and logistics businesses fit Capstreet?
A fit is an innovative technology business in supply chain tech. It should fall in one of the six areas the firm names, and it should solve a real integration problem.
| Area | What Capstreet describes |
|---|---|
| Track and trace | Technology that follows shipments and assets |
| TMS | Transportation management systems |
| WMS | Warehouse management systems |
| E-commerce and omnichannel | Tools for online and multi-channel fulfillment |
| Procurement software | Software for buying and sourcing |
| Supply chain analytics | Data and reporting across the supply chain |
TMS means transportation management system. WMS means warehouse management system. If your product does any of these jobs, and you have outgrown a founder-led sales model, compare yourself with the firm’s criteria next.
How do Capstreet’s criteria apply to transportation and logistics companies?
Capstreet publishes five criteria, and they apply to transportation and logistics owners the same way they apply to every other industry. Each one is listed below.
- Entrepreneur-owned businesses services companies
- $3 to $15 million of EBITDA
- Primarily majority investments
- Entrepreneurs reinvest alongside Capstreet
- Ability to apply the Capvalue Framework®
The firm also says it looks for “a tenured team of owners or managers seeking a majority capital partner, with solid financials, a defensive business model, untapped growth potential, and competitive advantages within their market niche.” Logistics software tends to sit deep in daily operations, which supports the defensive business model Capstreet describes. A fragmented market also fits its buy and build approach, where a platform adds smaller companies over time. Read about buy and build to see how that works. The link between the two ideas is our observation.
A fragmented industry has many small players and no clear leader, which can leave room for a consolidator. Capstreet’s approach often uses buy and build: buy a platform, then add companies to it. Its $3 to $15 million EBITDA range sits in what many call the lower middle market.
Which transportation and logistics companies has Capstreet backed?
Capstreet lists one transportation and logistics software company in its portfolio, and it is a current investment. Status is shown as Capstreet publishes it on its portfolio pages.
- PCS Software: Current, Fund IV. Develops and directly markets an integrated transportation management software solution for carriers and shippers in the United States and Canada. A customer can run dispatch, fleet management and accounting in one solution. Founded in 1997 and headquartered in Houston, TX.
What does Capstreet do after it invests?
Capstreet applies its Capvalue Framework® in three steps: Research, Build Scalable Platform, and Drive Business Transformation. Across its history, the firm reports 50+ Platform Acquisitions and 200+ Add-on Acquisitions.
- Research. Perform deep research to identify markets and build relationships with key entrepreneurs.
- Build Scalable Platform. Invest in top talent and technologies, and provide functional expertise for scale.
- Drive Business Transformation. Develop a long-term strategic roadmap and execute a buy and build strategy.
Capstreet also notes a link to its marine experience. See the marine page for the firm’s published view and its terminal operator investment.
There can be no guarantee that Capstreet will be successful in applying its Capvalue Framework®.
Next step
If your company serves transportation and logistics, read the full deal criteria, then start a confidential conversation through the contact page. You can also call 713-332-2700 or email connect@capstreet.com. See all industries Capstreet lists.
Frequently asked questions
What does Capstreet look for in logistics technology?
Capstreet targets supply chain tech: track and trace, TMS, WMS, e-commerce and omnichannel, procurement software and supply chain analytics. It likes the fragmentation in the sector because it creates room for integrated solutions. The company should also meet the firm's general criteria, including $3 to $15 million of EBITDA.
Does Capstreet invest in trucking or freight companies?
Capstreet's published thesis is about technology for the sector, not carriers or brokers. Its logistics portfolio company sells software to carriers and shippers. If you own an asset-based carrier, contact the firm to ask whether there is a fit.
What is PCS Software?
PCS Software is a Capstreet portfolio company listed as current in Fund IV. It develops an integrated transportation management software solution for carriers and shippers in the United States and Canada, covering dispatch, fleet management and accounting. It was founded in 1997 and is based in Houston.
How does Capstreet's marine experience connect to logistics?
Capstreet says its marine industry knowledge overlaps with its broader transportation and logistics experience. It sees itself as well positioned to help marine-serving businesses scale profitably. Its marine investment, GulfStream Marine, was a terminal operator and cargo handling company.
