A new initiative formed by Singapore shipping company Eastern Pacific Shipping (EPS) and technology accelerator Techstars aims to address some of the largest challenges the maritime industry faces today by investing in start-ups. Digital Ship asked Eastern Pacific Shipping’s (EPS’) head of open innovation, Gil Ofer, and Dhritiman Hui, managing director of Techstars to explain more.
Last year, Singapore-based ship manager Eastern Pacific Shipping (EPS) announced that it was teaming up with early stage investor and accelerator Techstars to form the Eastern Pacific Accelerator powered by Techstars. This MaritimeTech accelerator aims to cultivate and mentor the next generation of maritime technology entrepreneurs to accelerate technology development and find solutions to real problems that exist today.
Digital Ship asked Gil Ofer, Eastern Pacific Shipping’s (EPS’) head of open innovation, and Dhritiman Hui, managing director of Techstars why investing in start-ups is so important for the maritime industry.
In November 2019, the Eastern Pacific Accelerator powered by Techstars began a three-month intensive mentorship, research, development and collaboration programme with nine start-ups selected from hundreds of applications. Over the past few months, the start-ups have benefitted from mentorship from industry experts, access to EPS’ operational data, and the opportunity to deploy their technology on EPS’ fleet of over 150 vessels. In February 2020, a Demo Day was held where the start-ups pitched to an audience of investors, multinationals, government partners and other ecosystem players.
Eastern Pacific Shipping’s (EPS’) head of open innovation, Gil Ofer, explained some of the achievements and lessons learned from year 1.
“Our most important learning from year 1 was that even an exceptionally traditional industry like shipping can embrace new technology with the right ideas and approach. The approach of the past within maritime was to develop new technology either internally (e.g. legacy software systems) or due to regulation changes (e.g. the double hull for tankers) and to fund these initiatives from investors within shipping. We found that an open innovation strategy whereby we invited both the venture capital and maritime communities to take part in our goal of driving the industry forward by collectively shaping ground-breaking technology was truly effective as we witnessed over 160 external mentors coming through are doors to meet the start-ups and engage with them via critical feedback and commercial discussions.
“What we find most striking is the collaboration between the start-ups and EPS. You always hear about how stuck in the past the shipping industry is. But we discovered that with the right ideas and approach, this industry too will successfully embrace technology.
“The other thing that really pleased us was how deeply involved the broader maritime community became. Large swathes of the industry – shipping companies, cargo owners, port operators, classification societies – all came by to meet with the companies we had invested in. Contracts and deals naturally followed.
To replicate the success of year 1 as the programme heads into year 2, Ofer said they will build on the momentum of year one both at the company level and at the industry level. “In other words, I want to have more mentors from within EPS and more mentors from the wider maritime community that share our desire to bring shipping to technological modernity.”
At the beginning of the journey, EPS wanted to ensure a collaborative route was taken. Ofer said that he liked Techstars’ mentor driven approach and saw Techstars as a good partner to help achieve its goals.
“When I went to visit the Rakuten Accelerator powered by Techstars in 2018, what struck me instantly, through observation and my conversations with a few of the founders, was the energy in the room and the collaborative culture of the program. I knew then and there that I wanted to replicate that sensation at EPS. While I admit that I wasn’t fully aware of the value of the mentor-driven approach before kicking off our accelerator, I became so as I witnessed over 160 people from different sides of the shipping industry come through our doors and feel the same feeling that I felt at Rakuten – instantly sucked into the energy and ready to help out these fledgling companies by applying the Techstars mantra of “give first” without expecting something in return. To see people from possibly the most traditional industry in existence behaving this way was awe-inspiring and I’m excited to gather even more companies, suppliers, class societies, port authorities, and other shipping industry actors in the accelerator programs to come.”
Ofer said that when looking for a start-up during the selection process, EPS wanted someone that fitted into their goals and aims. “Beyond fitting into our general investment scope (maritime technology or technology companies with compelling applications for maritime), what we’ve learned from Techstars, who have been investing in early-stage companies since 2006, is that the most crucial factor in selection process is the TEAM. Recognising that ideas almost always change over time and companies “pivot” (Facebook started off as a way to rate how attractive your peers in college were), the trait that we are most concerned with is how the entrepreneur/s react/s in the face of adversity. Looking at their past accomplishments and the interview process helps us understand whether the founder and start-up is a good fit.”
Long term goals
According to Ofer, for EPS, there are three long-term goals. “First, we are interested in seeing a return on our investment both in terms of increased operational efficiency as a result of partnering with our portfolio companies, and also in their increasing valuations prior to their (hopeful) acquisitions or IPOs. Second, EPS would like to continue to develop the collaborative nature of the program by inviting as many players as possible in the maritime sector to participate as mentors to inject the start-up culture in an otherwise traditional industry, Lastly, and perhaps most importantly, is to focus on two P’s: People and Planet. Both the Seafarer and Mother Earth have been neglected by the industry to this day, and EPS is optimistic that investing in technology together can positively impact both.”
Why invest in start-ups?
When it comes to maritime start-ups, there are both challenges and opportunities for them to influence shipping business. One of these challenges is visibility. We asked Dhritiman Hui, managing director Techstars how they ensure that start-ups that join the programme get the visibility they need.
“Yes, there are challenges. But we prefer to focus on the opportunity. The maritime industry has plenty of equipment and service providers with hundreds of millions, and even billions, dollars in revenues. So clearly, this industry offers a lot of scale. This means there is plenty of opportunities for maritime start-ups to build big companies.
“In a decade or two from now, will we see a number of new names being added to the list of big equipment and service providers in the maritime space? Of course, we will. Will a number of them be technology companies that started life as a start-up? That’s the case in every industry globally so of course that will happen here, too. Will some of them come from the EPS – Techstars partnership? We are striving to make sure that’s the case.
According to Hui, “with a little bit of luck, maritime start-ups will raise the profile of the entire industry globally. And that raising of profile will unlock a lot of new opportunities for this industry.
“We think the opportunity exists. The maritime industry carries trillions of dollars’ worth of goods and touches almost every life on the planet. Its reach is almost unparalleled. We want to exploit that and build new opportunities for this industry.”
In the shorter to medium-term, Hui expects to see start-ups making the biggest dents in, “bringing about more more efficiency and making operations more environmentally friendly.” In the longer-term, he expects to see start-ups creating new sources of income for the industry. “The reach, connections and data the industry is sitting on are significant. Truly visionary start-up entrepreneurs will help unlock all of that and create new pools of revenue.”
Last year, a report published by Inmarsat and PUBLIC stated that they thought the supply of digital products and services to the maritime sector will be worth $278bn worldwide by 2030, with start-ups taking a significant share. While there has been some argument that there has been a lack of innovation in maritime, many believe that start-ups might be the ones to help address this.
“There have undoubtedly been fewer start-ups addressing the maritime industry than other industries,” said Hui. “But our thinking is that that will inevitably change. Why is that? The maritime industry is fundamental to a lot of countries globally. Let’s take Norway, Germany and Singapore as three examples. Maritime is core to these countries. And they also have a lot of engineering talent. Also, governments and local eco-systems in these countries is making ‘starting-up’ easier and easier for engineers and entrepreneurs from these countries. These trends will create more and more start-ups that will address the maritime industry.”
There has also been some thought that there might be cynicism towards start-ups from large maritime companies. Hui said that maybe it’s not cynicism but more a lack of a familiarity. “The maritime industry is a little less used to start-ups turning up with new ideas that other industries are. That lack of familiarity causes some friction. But again, we feel that will inevitably change.”
This article was originally published in Digital Ship’s April/May issue. Click here to view the magazine.