Brazil is getting a lot of press time these days, but that isn’t too terribly surprising since the 2016 Olympics are gearing up to kick off in in about two weeks.
But innovation watchers have been watching Rio and Brazil in general for some time as the nation increasingly becomes an incubator nation for FinTech development and talent. One of the leading startups in the emerging Brazilian class is CargoX, a service that has been (unsurprisingly) described as the “Uber for Trucks.”
But unlike most most “Uber ofs,” Cargo X has a more than ideological connection to the on-demand platform that launched a thousand imitators all over the world. Cargo X also has a practical tie. Uber co-founder Oscar Salazar is an investor in CargoX and, though he has seen more pitches for “the next Uber” than almost anyone on the planet, in the case of the Brazilian trucking firm he thinks there just might something there.
Because as it turns out, trucking goods in the Brazilian market is harder than it looks — and rather more difficult than it needs to be.
“They don’t have the tools to talk to each other,” Salazar said in an interview with TechCrunch. “There’s a huge information asymmetry playing an important role there. If you show me a market with information asymmetry, I’m going to show you a $1 billion opportunity.”
CEO Federico Vega actually doesn’t see his firm as an Uber imitator since the service Airbnb offers is in his opinion a much better metaphor. Cargo X at base helps truckers with room to fill in their rigs fill that space. And there is a lot of space to fill, as there are between 300,000 and 350,000 trucks running in Brazil day-in and day-out, most of which are running 40 percent empty. Cargo X fills that hole, literally, and lowers costs (while upping revenue) for truck owners.
Party hats — everyone wins.
Vega describes his firm as one that “operates as a transportation company with no assets,” which makes it easier for both sides of the platform to trust in the deal.
“We can provide our clients with 100 trucks tomorrow or one truck, because I don’t own the trucks, I own the network” Vega said.
And that network is pretty big, spanning 150,000 trucks by Vega’s count, and running in a variety of ways. Some truckers are using the service to fill up for return trips, while others literally get all of their freight from Cargo X, which their founder says is the ultimate goal.
“In an ideal world,” he said, “CargoX would work with more and more truckers in that exclusive capacity.”
As of today, Cargo X has raised $14 million total, with $10 million announced this week in a Series B round led by Goldman Sachs. Valor Capital Group, former DHL Express US CEO Hans Hickler and Salazar are all previous investors who also participated in the round.
“I believe in the future, but I believe that in order to build future that is sustainable, we need to create and lay out the foundation,” Salazar noted.
The Week In Investments
Yet another $3 billion plus week for the Investment Tracker. Could this be a trend? Could we yawn at a $2 billion week and raise alarm at a $1 billion week?
B2B gathered steam, with roughly 89 percent of the fund flows in the timeframe that ended July 15. The figure stands on its head the usual dominance of FinTech. But yet again, the weight this week, as had been the case last week, lay with just one deal, overshadowing just about everything else.
The biggest event: AccorHotels said last week that it would sell off a part (a majority stake) of the unit that is in place that buys and builds properties. Accor is the biggest hotel operator in Europe, with the deal now helping to loosen up funds to boost and spruce up its existing holdings.
Separately, Ocean Shore Holding is being bought by OceanFirst Financial in a bank deal that is not all that large, at $146 million, but does lend some consolidation in the New Jersey community bank space and a 32 percent premium to tangible book value.
Not a bad month for B2B, which, as a sector, has traditionally been a laggard. The bulk of the B2B deal flow has been, in the month of July, based mostly within the B2B commerce (see above) and travel subsets.