Altana AI locked up a $200 million Series C last week to become one of the latest unicorns.

A well-funded startup reaching a $1 billion valuation is nothing new in this day and age. However, what was notable was a supply chain management startup raising big money at such a valuation after the astonishing drop-off in venture funding the industry has seen since its salad days of 2021.

Total venture funding to supply chain startups have yet to hit even $2 billion this year — a pace that if continued will result in a stunning 79% drop from the all-time high set in 2021 of $14.7 billion, per Crunchbase data.

In fact, at its current rate, it will not even match the $3.3 billion raised last year.

Deal flow in the sector also has declined almost as dramatically. The sector is on pace to see just more than 300 deals done this year — a 55% drop from 2021’s 711 and a drop of more than nearly 150 rounds from last year.

Declining deals

It was just four years ago when seemingly no startup sector — perhaps other than remote workplace tools — was hotter than supply chain management.

The industry was seeing phenomenal growth, as supply chain snags and logistic problems snarled both retail needs and manufacturing during the depth of the pandemic. The chaos led investors to pour millions of dollars into new technology promising companies better visibility and insights to manage their global supply chain even as the world was wrapped in a health crisis.

However, just as VCs have slowed their investments to things such as workplace tooling and food delivery, supply chain management startups have seen the flow of venture dollars caught in gridlock — similar to the issue they were trying to solve.

So far this year, big raises have been few and far between. The biggest went to perhaps the poster child for the pandemic-fueled boom in the industry just a few years ago.

Logistics giant Flexport — which just two-and-a-half years ago hit a peak valuation of $8 billion — raised $260 million from partner and e-commerce titan Shopify in January. That reportedly was done after the company burned through hundreds of millions of dollars last year. It also came after then-CEO Dave Clark abruptly left the company after just a year, and founder Ryan Petersen came back to take the reins as the company struggled with shipping volume declines after the pandemic boom.

Late last year The Wall Street Journal reported Flexport was acquiring the assets of shuttered Jeff Bezos-backed digital freight startup network Convoy — another high-flyer during the boom times once valued at $3.8 billion but ceased operations by late last year.

Buyer beware

It is likely the stories of Flexport and Convoy have made investors much more timid in the space.

Aside from Altana and Flexport, only Germany-based CargoBeamer — which transports semi-trailers by rail — and India-based on-demand logistics network startup Shadowfax have raised nine-figure rounds this year.

It is obviously important to note that venture funding has been down in nearly every sector since 2021 — when all-time records were set for venture spending.

However, venture funding to most industries isn’t down nearly 80% from 2021, and some sectors — like cybersecurity — are seeing bounce backs. The supply chain sector also is on pace to be down by an eye-popping 76% from 2022 and less than last year’s $3.3 billion.

That’s not to say there could not be a rebound. Altana could be a good example. The startup’s embrace of AI tech no doubt made it interesting to investors — including lead investor, the US Innovative Technology Fund, which has poured money into several AI startups.

AI isn’t just an investor craze, but also a useful technology, perhaps especially regarding the handling of the supply chain. One could easily see its value in dealing with logistics, contracting and regulations.

The significant misses in the industry of the past few years, however, as well as the fading memory of pandemic-related supply chain issues — toilet paper is back on the shelves — likely will have a long chilling effect on investment in the sector.

At least until the next global health crisis.

Related Crunchbase Pro list:

• Supply Chain Management Funding

Related reading:

• Supply Chain Startup Altana Hits Unicorn Status, Raises $200M
• Flexport Raising $260M From Shopify — Report