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.
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