With its third fund now closed at $54 million, Dynamo continues to lead investment in the technologies that make, move, and monetize the world's goods.

When Santosh Sankar co-founded Dynamo Ventures in 2016, supply chain tech wasn't trendy. Today, the Chattanooga-based firm has become the go-to investor for founders reimagining global commerce infrastructure.

"Our thesis has always been about the backbone industries of the economy…When we started ten years ago, people questioned why we'd focus solely on supply chain and logistics. Now, everyone understands that these foundational systems need modernization."

What struck us in our conversation was how Santosh maintains the hunger of a first-time fund manager while demonstrating the strategic clarity that comes with three successful fundraises.

Dynamo's evolution shows an increasing focus on getting in earlier. While Fund II maintained a 50/50 split between pre-seed and seed investments, Fund III is leaning more heavily into pre-seed, with two-thirds of investments now happening at this earliest stage.

"The pre-seed stage is where we can add the most value," Santosh explained. "We're making high-conviction bets when others are hesitant, writing meaningful checks, and providing hands-on support when founders need it most."

He adds that too many investors want to see traction metrics before committing. They’re comfortable making decisions based on the founder's vision and their understanding of the market opportunity. That's their edge.

“We oftentimes look for insight at the early stage that we're investing at because if I can find and buy into your insight behind why you're doing what you're doing and the way you're doing. I can then help you craft that into something that's defensible. When you compound that over time, it turns into a moat. It drives me nuts when some investors ask a pre-seed company what their moat is, or seed company, or arguably in a series A company, they’re in the middle of building it.”

Recent news on Stord’s $200m round at a $1.5b valuation confirms Dynamo’s thesis. As the first check in 2016 from Dynamo’s $18m Fund I, Stord has since

* Sustained profitability since 2024

* 5.5x growth since 2022

* Over 30M orders delivered in 2024

* Expanded to 11 Stord fulfillment nodes with a network of partner centers around the globe

"Supply chain isn't just having a moment," Santosh observed in a recent LinkedIn post. "It's experiencing a fundamental shift in strategic importance. What was once viewed as a cost center is now recognized as a competitive advantage."

When we asked about timing their third fund during market uncertainty, Santosh was clear: "The macro conversation helps us. The push for reshoring, nearshoring, and supply chain resilience isn't cyclical—it's a generational shift. Leaders now understand that optimizing for efficiency alone creates fragility. We're investing in the companies building robust, anti-fragile systems."

Unlike VCs clustered in tech hubs, Dynamo embraces its Chattanooga location at the center of America's industrial economy. Santosh emphasizes believing in the power of place. "Being headquartered in Chattanooga gives us proximity to the real economy – the warehouses, distribution centers, and manufacturing facilities that make modern life possible. We're not just investing in technology; we're investing in transforming industries that have been the backbone of the global economy for generations."

While rooted in America's heartland, Dynamo's vision is global. Two-thirds of their investments are in North America, with the remaining third internationally distributed.

"Maybe what we haven't addressed so far is we’ve invested globally since our first fund," Santosh shared. "Two-thirds of our fund has been invested in North America, and the balance overseas. There's a concentration in Europe, but Latin America is clearly becoming very important to us, and we have a smattering of companies elsewhere in the world as well."

Innovation has no zip code, and Dynamo stands apart by making carefully selected investments where they provide substantial capital and hands-on support:

* Deep industry connections to potential customers and partners

* Operational expertise in supply chain and logistics

* Tactical support on go-to-market strategy and talent acquisition

"We're not in the business of making a hundred bets hoping a few work out…We make fewer, more concentrated investments where we can truly partner with founders. That approach requires confidence in your thesis and the discipline to say 'no' a lot."

With Fund III now closed, Dynamo is set to continue transforming global commerce infrastructure through its high-conviction, hands-on approach to pre-seed investing.

"Our vision hasn't changed since day one," Santosh reflected. "We believe the future of supply chain isn't just about incremental efficiency…it's about reimagining these systems from the ground up. The founders we back are building that future, and we're honored to support them at the earliest stages of their journey."

Congratulations to Santosh and the entire team! We're excited to follow your journey as you support founders building technologies that make our world go around a bit smoother.

Special thanks to John Gleeson for introducing us to Santosh.

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit slicefund.substack.com

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