Seattle-based Convoy, a digital freight technology-enabled network, recently announced it secured $185 million in Series C funding. The company said the round of funding was led by the growth equity investment fund of Google’s parent Alphabet City, CapitalG.
With this funding, Convoy said that the amount of total capital it has raised now stands at more than $265 million.
Company officials said that Convoy plans to use this capital on product innovation to meet the scale and demand from shippers and carriers.
“Trucks run empty 40% of the time, and they often sit idle due to inefficient scheduling. This is a drag on the economy, the environment, and the bottom lines of shippers and carriers alike,” Dan Lewis, co-founder and CEO of Convoy said in a statement. “Convoy’s ability to serve our shippers and carriers with ground-breaking, innovative technology is already having an impact on these critical problems, and our partnership with CapitalG and other leading investors will accelerate this. We are very excited about what lies ahead.”
Convoy is one of several nascent players in the digital freight brokerage space that has received venture capital funding. Others that have made similar announcements in recent months include Cargomatic and Transfix, among others. What’s more, research from supply chain consultancy Armstrong & Associates notes that digital freight matching companies such as Convoy, Transfix and Uber Freight have done a good job securing funding-over $420 million in the U.S. alone-and are generating buzz.
“While operationally they are small to midsized companies wrapped in proprietary technology, some may grow into market leadership positions,” said Evan Armstrong, president of Armstrong & Associates. “Scale and capabilities are important in truck brokerage. There are a lot of emerging companies with some innovative technology or a slick app. But to really be a viable player, many of these companies will need to develop more than just one facet of technology. And in order to really attract shippers, they will need to build sufficient density in their carrier bases.”
Stifel analyst Bruce Chan said that in his firm’s view, there are only a couple of contenders right now that fit that bill.
“That’s not to downplay the strategic importance of technology going forward, but there are a lot of large players that have the resources to buy or build rather quickly—and many of them have already done so,” he added.
As these types of companies continue to build up steam, they face heightened competition from larger and more established industry players like XPO Logistics, Echo Global Logistics, and CH Robinson, among others. Industry experts maintain that these companies still lead the pack, given the longstanding relationships they have with shippers, coupled with their vast carrier networks.