Digital Freight Startup Convoy Raises $185 Million, Surpasses $1 Billion in Value
September 21 2018 - 06:29AM
Dow Jones News
By Erica E. Phillips
Digital freight-booking startup Convoy raised $185 million in a
funding round led by an investment arm of Google parent company
Alphabet Inc., adding big new backing for the company competing in
an increasingly crowded field trying to reshape U.S. shipping
operations.
The funding round led by Alphabet's CapitalG, one of the biggest
investments yet in a lineup of technology-driven freight startups,
brings Convoy's total raised to $265 million, and Chief Executive
Dan Lewis said it gives the business a total value of over $1
billion.
Seattle-based Convoy is one of a stream of operators trying to
bring to the freight world what Uber Technologies Inc. built in the
on-demand passenger industry. Those companies include Uber itself
with its Uber Freight business, and other technology-focused
businesses like Transfix, Cargomatic Inc. and Trucker Path.
Altogether, digital-focused freight management startups have
drawn more than $420 million in new backing since 2011, according
to industry analysts Armstrong & Associates.
Convoy runs a website and mobile application retailers and other
shippers can use to book trucks to move their goods, a service
that's in high demand amid strong economic growth and the busiest
shipping season of the year leading into the winter holidays. Like
other digital freight brokerages, Convoy says it can pair shippers
and carriers faster than traditional freight brokers that have
varying degrees of technology.
With the new funding, Convoy plans to go beyond basic freight
brokerage by adding services like the ability to book multiple
shipments at a time, speed up payments and use data from shipment
tracking to identify bottlenecks in its customers' supply chains,
Mr. Lewis said.
"There actually is a set of evergreen problems shippers and
truck-drivers deal with," Mr. Lewis said. "So beyond just matching
[shipments to carriers], we're going down that list of problems and
we believe we can build technology that addresses those, too."
Convoy and other startups are trying to push into a highly
fragmented business that includes several multibillion-dollar
freight brokers, including C.H. Robinson Worldwide Inc., Hub Group
Inc. and XPO Logistics Inc., as well as online truck freight
exchanges, or load boards, that match loads with available
trucks.
Digital brokerage startups are competing with each other to draw
shippers and freight haulers onto their platforms because more
volume often drives better rates with the carriers.
Long Beach, Calif.-based Cargomatic raised $35 million last
month and Transfix last year raised a $42 million in a Series C
funding round that brought its total to almost $79 million.
Convoy's $185 million Series C also included funds and accounts
advised by T. Rowe Price Associates Inc. and Lone Pine Capital, as
well as existing Convoy investors Greylock Partners and Y
Combinator. Convoy said David Lawee from CapitalG will join its
board of directors.
Convoy said it works with several hundred shippers, including
Unilever PLC, Land O' Lakes Inc. and GE Appliances. Mr. Lewis said
Convoy is looking into opening a second office.
"This is about more than just that core marketplace," he
said.
Write to Erica E. Phillips at erica.phillips@wsj.com
(END) Dow Jones Newswires
September 21, 2018 06:14 ET (10:14 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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