Built from the ground up with designs to transform the
delivery of freight through technology, Convoy
expects to turbocharge this mission thanks to a Series D round of funding,
announced Wednesday morning.
The company has received $400 million in a round led by previous Convoy investor T. Rowe Price Associates, which co-led the new round with participation from Baillie Gifford, Fidelity, Durable and Series C investors CapitalG and Lone Pine Capital. The latest round values Convoy at $2.75 billion. In four total rounds of funding, Convoy has raised $668 million.
“It’s definitely something we were expecting,” Dan Lewis,
co-founder and CEO, told FreightWaves in an exclusive interview. “There’s a lot
of interest right now in building [and funding] businesses that are
sustainable.
“Convoy is front and center in making this happen,” he
added.
Previous funding rounds included investors Greylock
Partners, Y Combinator, Cascade Investment, Salesforce.com CEO Marc Benioff,
Code.org founders Hadi and Ali Partovi, U2’s Bono and The Edge, and Jeff Bezos
via Bezos Expeditions. In August 2017, Convoy secured $62 million in a Series B
fundraising round and backed that up with a
$185 million Series C round in September 2018. In October 2018, it opened
an Atlanta office to go along with its headquarters in Seattle.
The new funding affirms Convoy’s overarching mission and
confidence in its technology, explained Ziad Ismail, chief product officer.
“Over the last year, since our last round, we’ve made
material progress in how we’ve [thought about and approached the supply
chain],” Ismail told FreightWaves, noting the success Convoy has seen with
Automated Reloads, launched in June, as an example.
Automated Reloads
prepackages a collection of loads that take into consideration criteria
such as the carriers’ lane preferences, driver hours of service availability,
driver locations and facility wait times. The idea is to provide carriers with
multiple options so they don’t have to spend time looking for backhauls. A
package of loads is presented with a single price for all the loads, rather
than individual prices for each load.
Automated Reloads built upon the success of Suggested
Reloads, which offers possible loads for drivers. Other company programs
include a
power-only program that utilizes a pool of drop-and-hook trailers and
freight,
automatic detention pay that automatically pays drivers $40 per hour after
two hours of detention time, and Dynamic Backup, a shipper tool that inputs
real-time and guaranteed market rate information into the routing guide, giving
shippers more visibility into rates.
These products, Lewis said, are examples of how Convoy is
looking to reimagine freight movement by moving beyond matching loads to
truckers, instead building optimization tools that both truckers and shippers
can use to improve their businesses.
“We’re going to accelerate the model we have,” Lewis said.
The Convoy app “has allowed us to really identify waste and inefficiency.”
Lewis pointed to Convoy Connect, Convoy Go, Convoy Now and
the Automated Reloads offering as examples of how Convoy is pushing boundaries.
“These investments we’re making in the programs really help shippers and really
help carriers operate their businesses more efficiently,” he said.
Convoy’s most recent innovation is direct-from-shipper
loads. Loads under the direct-from-shipper program appear as “bid only” loads
in the Convoy app. Carriers can bid individually on the loads or use Convoy’s automated
bidding process to set the price at which they want to haul specific loads.
According to Convoy, shippers traditionally make only about 10% of their loads
available to any one broker, severely limiting the options for carriers working
with that broker. Convoy’s direct-from-shipper program lists all of a shipper’s
freight through the app.
In early October, Convoy announced Convoy Connect, a free
transportation management system for shippers, opening up access to Convoy’s
network of capacity and guaranteed, real-time pricing. It allows carriers to
continue to
use their own network within the TMS architecture, keeping all potential
carriers and key lane data in a single system. And that followed application
programming interface (API) access announced in September. The
API program allowed for easy access to Convoy’s automated real-time pricing and capacity for
both live and drop-and-hook loads.
Ismail said the company will continue to improve these
programs and that “the teams are working on areas where we’ll expand in the
future,” although he didn’t specify what type of innovations customers may see.
Since its founding in 2015, Convoy has been trying to
reimagine digital freight networks, first launching a freight matching service
that connected truckers to shippers through its app. It has added numerous
features the past couple of years that appeal to carriers, owner-operators and
shippers. And it is that growth of solutions that is particularly appealing to
carriers, shippers and obviously, investors.
Lewis said that in the past year, as more programs were made
available to Convoy customers, its volume has more than doubled. He declined to
provide a specific number, but as validation of the value Convoy is providing,
relayed that a top-10 shipper was visiting Convoy’s Seattle office last week
and said they “shared with us that they’ve grown faster with us” than any other
company.
All of this, though, is central to the company’s original
mission, Lewis said, and that is to build a digital freight network. It’s a
term Lewis and Ismail said more accurately describes what Convoy is, as opposed
to more common terms, such as digital freight matching (DFM).
“There was a lot of confusion around what [DFM] means,”
Lewis said. “Brokers run manual processes, matching trucks to loads. … As those
companies get bigger, they have to add people and they don’t necessarily get
more efficient.”
Lewis said Convoy’s combination of data and machine learning
complement its innovations and help it grow a network, rather than a brokerage.
“We really think it’s a different thing because networks get
more efficient as they grow,” he said, noting that a network needs trucks
committed to the platform and the ability to offer customers the opportunity
for single- or multi-load options via a technology platform. Another important
difference is the ability to gain efficiencies through scale.
“We’re not constrained through an existing model of having
to run thousands of [loads] through an existing platform [where brokers make
decisions based on visibility into only a single load],” Lewis said. “We think
about it for the long term for the shipper and long term for the trucker to
help them optimize [their businesses].”
Ismail said what separates Convoy from other providers is
that Convoy built its system to operate this way, rather than “backing into it”
from a legacy platform.
“We landed on this theory on how we were going to build the
company a couple of years ago,” Ismail said. “We really like the strategy we’re
on and we’re just doubling down on it.”
“We’ve seen this go from a business where the industry was a little skeptical and wondering where this fit in … and now we’re earning [shippers’ trust] through results,” Lewis said, adding that carriers benefit,
particularly as the freight markets cool. “On the carrier side, we can help
them in this cycle by helping them get loads and get batches of loads.
Is Convoy done raising funds? Lewis didn’t rule it out but
said this $400 million round sets the company up to go in several directions —
a path that will be defined as Convoy continues to grow.
