Convoy heralds $260 million capital funding raise, bringing total value to $3.8 billion

Seattle-based digital freight network Convoy said today it has raised $260 million worth of new funding, which will be geared towards accelerating the development of what it called its “efficiency-focused technologies in response to surging customer demand within the $800 billion trucking industry.”

The new funding includes: a $160 million Series E preferred equity round led by Baillie Gifford and funds and accounts advised by T. Rowe Price Associates, Inc.; a $100 million venture-debt investment from Hercules Capital, Inc.; and a new $150 million line of credit.

Convoy said that, including this investment, it is now valued at $3.8 billion. And, to date, Convoy has raised $928 million in funding (exclusive of the line of credit) which includes this most recent Series E raise of $260 million. Convoy is now valued at $3.8 billion. 

“Every day millions of truck drivers get in their cabs and do the work that keeps our economy moving while ensuring people get what they need,” said Dan Lewis, Co-Founder and CEO of Convoy, in a statement. “The pandemic highlighted how important trucking is and how volatile and inefficient this industry can be. We know that we can do better by using modern technology and algorithms to help orchestrate freight logistics, improve service, reduce waste, and help drivers. That is Convoy’s mission.” 

Convoy officials noted that in 2015 it established what it described as “a new approach to trucking,” which digitally connecting shippers and carriers to the Convoy platform, applying machine learning models to more efficiently match carriers to loads. 

What’s more, they said that today the company’s platform connects shippers and freight brokers to a nationwide network of 400,000 trucks through its carrier-facing smartphone app and technology platform, resulting in an on demand and “truly elastic truckload freight capacity, allowing shippers to move goods more efficiently, and truckers to earn more while reducing unnecessary carbon emissions.” 

Convoy Chief Growth Officer Ryan Gavin told LM that the main focus of this round of investment starts with doubling down on its technology platform, which uses automation and machine learning to drive its digital freight network.

“Technology is the only path to efficiently scale with the demand levels we are seeing for Convoy right now,” said Gavin. “And just as the cloud revolutionized the elastic capacity model for computing, machine learning and automation are revolutionizing elastic capacity for freight, bringing more efficiency and productivity to shippers, carriers, and now brokers who are leveraging Convoy’s platform. Second, we have a number of capacity and pricing programs such as Convoy Go, Guaranteed Primary, and Convoy for Brokers that are experiencing exceptional demand in these volatile times. With this raise we can greatly accelerate the pace and scale of those programs to service more customers and partners—who need the flexibility coupled with the certainty that these programs provide—now more than ever.”

As for ways in which this round of investment will help Convoy’s customers, Gavin said the top way will be in the form of hiring. With the company experiencing strong demand from our enterprise shipper customers, it will be deploying proceeds from this raise to support accelerated growth, for adding talented engineers, data scientists, and logistics experts to its team.

“In short, we are hiring a lot right now and positioning Convoy to support the near-term demand we are seeing and prepare for a long runway of growth and scale,” he said. “Bigger picture, we remain focused on our mission to transport the world with endless capacity and zero waste. This investment enables Convoy to continue directly addressing billions of dollars in waste happening in the trucking industry, while accelerating our development of first-to-market products and technologies, and expanding our trucking marketplace and our offerings for carriers and shippers across the U.S.”  

From a competitive perspective, Gavin explained that Convoy has been a digitally native company its inception in 2015, adding that in contrast to an M&A approach, the company has intentionally built its own products and technologies in-house, while growing its network of carriers and shippers organically. 

“We now have over 400,000 trucks in our elastic network, with more than 50 machine learning models which automate and optimize 98%+ the matching of a truck to a shipment,” he said. “We collect over 1,000 data points on every shipment, giving shippers a new level of transparency and insights into improving performance and saving money. The bi-product of being digital native means we can scale far more efficiently and, with that scale, provide disproportionate benefits in the form of cost savings and unmatched flexibility with our capacity to shippers with uncompromising quality levels. For carriers and drivers, they are keeping their trucks full more often, and running highly efficient loads in the form of bundles we create or by participating in our drop and hook and power-only offerings. And now brokers can tap into our elastic capacity to secure a truck when they need it, where they need it.” 

Gavin added that this deal validates the value and importance of bringing greater efficiency to trucking and logistics, and as volatility remains, he said that Convoy believes there has never been a more important time to be great at it does.