Logistics, particularly in shipping, more or less make the world go round. Done right the average person doesn’t think much about them, mostly because the process by which goods ship from one side of the world to the other is not the type of story that is super interesting to most people.
The picture is often a good deal more complex — and more expensive — for small players hoping to step on to the field, especially when it comes to trying to tap into any sort of cross-border shipping capacity. Working with freight forwarders and logistics providers can be so daunting that the best way to capitalize on the opportunity can seem to be to sit it out.
This is where Fleet wants to help out. First launched in 2014 as Shipstr, the firm’s original intention was to create a platform to connect small companies without freight brokers with service providers for international cargo shipments. The point was to disrupt those traditional freight forwarders.
But Fleet was not alone in that effort. Flexport, Freightos and Haven all were in the space earlier — and were faster on the fundraising draw. Haven banked $3 million in seed funding a little over a year ago, and as of last fall Frieghtos had brought in $23.3 million in funds in three rounds of funding.
And those are just the startup competitors — to make the field just a little more crowded and keep things really fun, Amazon has also jumped into the freight forwarding conga disruption line, making it that much harder for the smallest player attempting to be the “Expedia of shipping logistics.”
And so, as they say in Silicon Valley, when the going gets tough, the tough pivot to something more attainable — which in Fleet’s case meant to stop trying to find a way to disrupt those freight forwarders, and instead build them a reasonable marketplace where they can meet with potential SMB clients and offer competitive bids.
This, founder Max Lock notes, is actually a win-win for both sides. The SMB customer no longer has to go through a long and complex process of trying to find the freight logistics expert for them with a lot of leg work, because Fleet is offering a convenient marketplace that makes that kind of comparison shopping much, much simpler. The freight forwarder, on the other hand, saves time and money in the customer acquisition process, which is good in itself and also allows for more flexibility in the deal.
“It costs a freight forwarder over $200 to send a sales person to meet with an SMB and they still don’t know if they’ll have an opportunity to quote on their shipments,” said founder Max Lock.
So last July, Shipstr became Fleet and became a marketplace where today roughly 150 freight forwarders currently use its quoting platform. According to internal estimates, customers save around 20 percent on shipping costs. The plan and next phase of development involves beefing up the marketplace functionality, including reviews, ratings and package tracking.
That expansion and refinement doubtlessly got a bit easier this week, with the firm’s recent pickup of $4 million in seed funding out of a round led by Hunt Technology Ventures.
“I think we are pretty well differentiated now by taking the marketplace approach and using the existing logistics infrastructure that our network of freight forwarders has built,” said Lock. “We will continue to differentiate ourselves by focusing on the needs of SMBs because they have historically been under serviced by traditional freight forwarders.”
Investments for 4-8-2016
Ain’t got no money, honey.
Sounds like an old blues refrain, but it’s a fair assessment of the positively glacial pace of the last few weeks as measured in investment dollars flowing into the payments and FinTech space. The week that ended April 8 barely registered as a blip, with only $73 million of deals done, which reads like it might be a typo — only it’s not. The number really is, and was, that low, with yet gain – at this point one wonders when we might change this sentence – almost all tied to FinTech. Forget about recent headlines extolling the $12 billion seen across the VC industry and heightened levels in the most recent quarters. That’s rarefied air being breathed by companies of all stripes and sizes – and in payments, B2B and FinTech, that’s not the case.
Lest you be underwhelmed by the headline number, consider that about two-thirds of that headline got its gist from one single deal. The $50 million raised by content management service provider CrownPeak, which has its gestation from K1, was the only real deal of size – and size is relative this week. In an interesting wrinkle with the capital raise, CrownPeak also merged with Active Standards, which indicates a cross-border relationship formed to cross-promote software as a service products.
A smattering of single-digit deals brought up the rear to close out the week, with a few $5 million transactions and $4 million transactions – buckshot in the realm of private equity. But of course it is meaningful to those recipients, and topping the list was LevelUp, which operates in the mobile payments space and which also has raised a total of $45 million across a number of rounds (the latest investors were not disclosed).
To paraphrase an upcoming show that’s on everyone’s minds – “Winter is Still Here.” At least for FinTech. At least for now. Would be that some investing dragons swoop in and breathe some fire into the sectors to get the embers a-flaming. One tell might be earnings season, which, as the publicly traded names in technology – and the unicorns – bring commentary to bear on results, may fan some flames. All eyes, and wallets, will be on the U.S. and Chinese consumer and their continued desire to spend, and keep the digital banking and eCommerce trends afloat.