Digital freight-booking startup Convoy raised $185 million in a funding round led by an investment arm of Google parent company Alphabet Inc., GOOG 0.76% 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.
There actually is a set of evergreen problems shippers and truck-drivers deal with….We believe we can build technology that addresses those. —Convoy CEO Dan Lewis.
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.