Convoy, a digital freight network that links shippers and carriers, has secured $260 million in additional capital to expand projects that would propel the transportation technology sector forward. Convoy’s current round of funding consists of two parts: a $160 million Series E equity investment headed by Baillie Gifford and T. Rowe Price, which raises the company’s valuation to $3.8 billion, and a $100 million venture loan investment from Hercules Capital. J.P. Morgan also provided Convoy with a fresh $150 million line of credit.
As e-commerce grows internationally, startups that employ machine learning software to automate carrier dispatch and build more efficient and lucrative routes have garnered new rounds of financing in recent months. CloudTrucks received a $115 million Series B round in December to expand its digital integration between shippers and carriers, while SmartHop raised $30 million earlier this month to develop its financial products, such as its fuel card, which helps truckers, lock in excellent gas prices.
Convoy, a late-stage startup, already includes finance solutions such as a fuel card and rapid payments. The firm now wishes to build on newly launched items. Convoy introduced its drop-and-hook service last year, which allows shippers to pre-load Convoy trailers and lays them aside for pickup by truckers during more flexible times. According to CEO Dan Lewis, this service has constantly sold out since its start, which is why a portion of the cash will go into growing beyond the existing 3,000 trailers Convoy has leased out countrywide.
Lewis told TechCrunch, “We’re going to extend that program by adding a bunch more trailers and implementing a bunch of technologies to optimize the routing and efficiency of these trailers and the whole price surrounding it.” “From the outside, it doesn’t appear to be a very complex system to build.” Convoy is trying to expand its 1,300-person workforce in all areas, notably engineering, as it attempts to tackle the difficult challenge of route optimization when there are apparently unlimited factors to consider.
According to Lewis, each individual participating in the process — the truck driver, the warehouse manager, the procurement manager, the driver, and the dispatcher — must interact with a separate software experience. According to Lewis, Convoy also plans to expand a new project that lets other industry brokers to run their brokerage businesses on the Convoy technology platform, providing them access to the vehicles on Convoy’s digital network.
“We’re saying, that’s great, you can really put your cargoes into our system and use our marketplace to get transportation capacity through our digital system,” Lewis explained. “We’ll just make a business out of it, too.” And that’s really beneficial for our truck drivers because it means more freight enters our platform, the network strengthens, and truck drivers have a better experience because they have more alternatives.”
According to Lewis, having more brokers and drivers on the network can help to stabilize trucking rates across the sector. Due to irregular supply and demand and a fragmented system, truck rates have been variable in recent years, resulting in dissatisfaction and insecure arrangements. Convoy’s trucking IT platform may use real-time pricing to better coordinate visibility and planning. Convoy expects to generate more than $1 billion in sales this year, according to the business. As the company grows, an initial public offering (IPO) may be considered, though Lewis acknowledged there is no precise strategy in place. On the public market, though, B2B enterprises may frequently go farther, in part because partners want to know if the company they’re working with has been well vetted and is in it for the long haul.