Digital freight startup Convoy has announced the closure of its business.
The Seattle-based trucking startup, which counted Jeff Bezos and Bill Gates among its investors, has announced that it was closing its doors after an unsuccessful four-month search for an acquirer, Bloomberg reported Thursday (Oct. 19).
In a memo to employees, founder and CEO Dan Lewis informed them: “Today is your last day at the company.”
“Following an exhaustive process, spanning many, many months during which we explored all viable strategic options for the business, the result is where we are today,” Lewis wrote. “Convoy is closing the doors on its current core business operations and exploring and evaluating strategic options for what might come next.”
The company, once valued at $3.8 billion by investors, had already downsized its workforce from 1,500 to around 500 employees and was facing imminent financial difficulties, with funds expected to run out within weeks.
The startup suspended operations on Wednesday (Oct. 18), PYMNTS reported.
Convoy raised $260 million in a funding round last year, which valued the business at $3.8 billion. However, the company has taken a hit from a decline in freight demand over the past year.
The challenging market conditions, including a significant freight recession and a contraction in capital markets, hindered Convoy’s potential acquirer from finalizing a deal. The startup had raised over $1 billion from investors, making the potential loss significant for many stakeholders.
The closure of Convoy reflects the challenges faced by numerous logistics startups due to declining shipping prices and demand, as well as a challenging market for venture capital fundraising. Other companies, such as San Francisco-based freight-forwarding firm Flexport and Seattle warehousing startup Flexe have also been forced to lay off employees due to decreased demand following the pandemic-induced peak.
Flexport, another digital freight startup, has been working toward profitability following a weak performance this year.
As PYMNTS reported recently, the startup has seen a string of departures in its leadership roster. In September, Chief Financial Officer Kenny Wagers and Jennifer Boden, vice president of people tech and employee experience, both stepped down from their posts.
Peterson is aiming for Flexport to be profitable by late 2024 or early 2025, alongside a goal to go public.