CMA CGM’s investment in ZeBox, a Marseille-based technology incubator and accelerator, is more than just a sign of how the container carrier is attempting to adopt an integrated logistics approach backed by modern technology. It’s also a sign that carriers can sometimes accomplish more by being less in control.
It would be easy to connect the dots between CMA CGM Chairman and CEO Rodolphe Saadé’s statement of intent at the JOC 2017 TPM Conference that his company would begin to invest in innovative startups and the development of ZeBox, located a short distance from CMA CGM’s headquarters.
But the key to the incubator’s success, according to ZeBox CEO Matthieu Somekh, is the way Saadé endeavored to build a different model more relevant to attract and develop potentially meaningful logistics technology founders.
While the original idea was to create a corporate incubator for technologies that could directly benefit CMA CGM, the pair decided that running ZeBox independently would enable better outcomes, with CMA CGM in a primary supporting role among other corporate partners. The idea was that innovations impactful to shipping might emerge from other sectors.
That model can be juxtaposed with Maersk Growth, the investment arm of CMA CGM rival Maersk. Maersk has taken a more direct role in incubating and investing in logistics technology startups. While there’s space for more than one investment model among liner carriers trying to embrace digitization, the divergent venture investment paths provide for an interesting comparison.
ZeBox launched in May 2018, with its first crop of startups unveiled during the summer.
Prior to helping to found ZeBox, Somekh worked in a variety of roles, from founding his own fiber laser startup to developing and leading entrepreneurship and innovation at France’s École Polytechnique. He’s also president of France is AI, a French association designed to promote the country’s artificial intelligence ecosystem. In a briefing with JOC.com at ZeBox’s Marseille office, Somekh said the role of the incubator is “bridging the gap between startups and corporate partners.”
Other than CMA CGM, which is the founding corporate partner, other ZeBox partners include Accenture, BNP Paribas, Ernst & Young, and the freight forwarders Centrimex and Ceva Logistics (which is now under the CMA CGM umbrella). Somekh said more partners are likely to sign on soon.
Independence brings options
Being independent is important for a couple of reasons, he said. First, it allows startups to get access to advisors and mentors from a range of industries, not just liner shipping. Second, it allows to ZeBox a wider range of startups from which to choose for its incubation and acceleration programs.
To wit, only seven of the 20 companies currently involved are logistics- or maritime-related, although many others could have an indirect impact on shipping through development of artificial intelligence, neural network, data science, electronic payment, or digital file access technologies. Some ZeBox startups won’t ever impact logistics, such as those working on medical or automotive technologies, but the range of industries represented can have cross-pollination effects on the founders participating from a business development or user experience perspective.
“It’s important to attract non-shipping startups to ZeBox,” Somekh said. “For example, there are a lot of similarities between hotels and shipping. There are opportunities to find developing technology in other industries that have an application to shipping. It’s the peer-to-peer effect of startups.”
In fact, Somekh said that it’s “more complicated to work with 15 startups in the same industry.” So, he and his team endeavor to find “companies that could be complementary. One company might have a strong tech team and the other might have a great business team. There’s sufficient reason in ZeBox to work harder — we don’t like to create competition with the exact same business models.”
Among the logistics-focused startups currently participating in the ZeBox program are: SeaRoutes, which helps vessel operators (and potentially others) optimize shipping routes; Transpare, a digital freight transport marketplace; and Green Sea Guard, which allows shipowners to monitor actual vessel emissions. A handful of others have indirect applicability.
ZeBox can also be seen as the tip of the technology development iceberg in Marseille, where entrepreneurship is proliferating based on a number of factors: proximity to CMA CGM, including veterans of the shipping line that have struck out on their own (such as the shipment management software provider BuyCo, and the container sensor technology company Traxens); the ease to what Somekh called “free capital” for startups from government programs designed to foster entrepreneurs; and Marseille’s geographic position at the intersection of Europe, North Africa, and the Middle East.
“We saw it as the only place to attract entrepreneurs from Southern Europe, the Middle East, Northern Africa, even from Paris,” said Somekh.
“It’s easy to find money in France with a good project, from early stage to Series A,” he said. “After that it starts to get more difficult. It’s also easier to raise ‘free money’ in France due to the strong public commitment towards innovative startups. You can create partnerships with academic labs. There are many opportunities to raise up to $1 million with no stake you have to give up. There are lots of [angel investors], and angels sometimes work in tandem to raise significant amounts.”
Somekh said the venture capital scene in France is also active and well-connected with venture capitalists (VCs) and private equity funds in North America. That’s important, particularly to the type of startups ZeBox is attracting, because the products they develop must have a potential market size larger than just France. That, of course, applies to global logistics.
Expanding to Caribbean
ZeBox is also attempting to extend its own geographical reach with the pending launch at the end of September of ZeBox Caraïbes to target founders in the Caribbean. “There are unique logistics challenges in the islands,” he said. “It’s also a place where French, English, and Spanish cultures connect, and it presents an opening to South America.”
The success ZeBox has had in attracting French and European startups, and the forthcoming location in the Caribbean, is an example of the diffuse nature of logistics technology incubation around the world. While US-based entities such as Silicon Valley-based Y Combinator and Plug and Play Tech Center; Boulder, Colorado-based Techstars; and Chattanooga, Tennessee-based Dynamo have focused partly or wholly on supply chain startups in North America, there are a growing number of such incubators around the world.
Techstars and Plug and Play both have global locations, but some of these incubators — such as PortXL in Rotterdam, Next Logistics Accelerator in Hamburg, Rainmaking Transport in Copenhagen, and Unboxed in Singapore (the incubation arm of the terminal operator PSA International) — are specifically maritime or logistics-focused. ZeBox and Unboxed created a partnership in June 2018.
All of this activity is creating multiple sources of potential investment, access to corporate advisory, business development, and talent pools, meaning founders need not flock to North America to get access to those critical components for early stage companies. Theoretically, that should drive value for shippers.
That, Somekh said, is ultimately what an effective incubator can do for emergent logistics technology providers.
“With a corporate fund, you’re sometimes only hearing about a problem specific to a certain company,” he said. “We want to make sure [the corporate advisors] are identifying problem statements that startups can address, so the problem must be shared by multiple partners. We also hope to open dialogue between corporate partners.”
For startups, the benefit of corporate partners involved in ZeBox is access to resources such as data sets, market insights, and proof of concept opportunities. “We don’t speak about investments,” Somekh said. “It may happen, but that’s not the main point we want to focus on.”