SAN FRANCISCO (Reuters) - Convoy, an app connecting truck drivers with loads of freight, has raised more than $60 million as startup investors double down on technology bets to transform the long-haul trucking industry.
Convoy, a Seattle-based startup founded two years ago, is part of a growing field of companies using mobile apps and algorithms to try and connect shippers with trucks more efficiently. Venture capitalists and entrepreneurs have been looking for opportunities to grab a slice of the $700 billion-a-year trucking industry, which still relies heavily on call centers and fax machines.
The funding round was led by Y Combinator, a technology startup accelerator based in Silicon Valley, Convoy Chief Executive Officer Dan Lewis told Reuters in an interview. Convoy is the first company Y Combinator has backed that was not part of its accelerator program.
Lewis declined to disclose the company’s new valuation, saying only it was “a significant step up.” Its total fundraising to date is about $80 million.
From January to June this year, trucking tech startups raised $478 million, on pace to exceed last year’s $763 million in fundraising, according to data firm CB Insights.
Convoy is one of several startups aiming to unseat traditional trucking brokerages with new technology. Convoy’s app allows truck drivers to find loads and shippers to find empty trucks using an automated process dictated by algorithms, which also determine the price for each load.
Replacing call centers and paperwork with automation enables trucks to spend less time driving around empty in search of the next load. Prices are lower for shippers too, because the company does not rely on salespeople working on commission, Lewis said.
“We are officially a broker today, but we are building something that hasn’t existed before,” Lewis said. “It doesn’t look at 60 trucks, it looks at 60,000 trucks and can match loads using predictive analytics. That is a complete game changer in the business.”
Convoy, however, has an uphill battle to stake out a meaningful share of a highly fragmented market where traditional brokerages such as C.H. Robinson remain powerful. Also, Uber Technologies Inc’s [UBER.UL] entry into freight hauling may pose a threat to Convoy, as Uber’s deep pockets allow it to undercut competitors’ prices.
Convoy, which has about 120 employees, says thousands of truck shipments are completed every week through the app, although it declined to disclose revenue numbers. The company’s more than 300 shipping customers include Unilever and Anheuser-Busch, and some 10,000 trucking companies use the app.
Reporting by Heather Somerville; Editing by David Gregorio