Wealthy backers get Convoy trucking company on the road to success
Promises to address industry inefficiencies and traffic congestion
As Bill Gates and Jeff Bezos jockey for the designation of world’s wealthiest man, the Seattle billionaires are united behind at least one local venture.
They are both investors in a trucking logistics start-up that competes with Uber Technologies.
Convoy is a two-year-old Seattle company, makes software that matches nearby and available truckers to a shipping job. It works in the same way that the online business of the Kuwait-based logisitcs major Agility, and the Saudi-based start-up Trukkin, operate. Convoy said that it had raised a new round of funding from Bill Gates’ Cascade Investment and other backers. Mr Gates joins Amazon’s Mr Bezos, who invested earlier. The latest financing totals US$62 million.
The investment will not break the bank for Mr Gates or Mr Bezos, whose fortunes are within $3 billion of each other, according to the Bloomberg Billionaires Index. But Convoy has become a hot start-up investment among fellow billionaires. The Salesforce.com chief executive Marc Benioff and the KKR co-chief executive Henry Kravis are also shareholders. The IAC/InterActiveCorp chairman Barry Diller participated in the new round with Mr Gates.
Convoy was initially pitched as an “Uber for trucking” and has raised $80m in total since starting in 2015. But this year, Uber rolled out its own version of on-demand trucking. The service, called Uber Freight, connects truck drivers with long-haul assignments. There are other providers, such as Trucker Path, but Uber’s financial heft – having raised more than $15bn since its inception – makes it a force. That is despite distractions posed by a lawsuit claiming a former Uber executive, who was working on autonomous trucking technology, conspired with the company to steal trade secrets from Alphabet’s Waymo. Uber denies wrongdoing.
The Convoy chief executive Dan Lewis said he hopes to take advantage of Uber’s distractions. “It isn’t clear what’s going to happen with Uber,” he said. “The leadership of the company in general is gone.”
Uber said its two-month-old freight service has been greeted by enthusiasm. “We’ve learned an incredible amount already and are continuing to recruit the top minds in the industry as we ramp up our investment in this technology,” a spokeswoman said.
Mr Lewis said Convoy is fulfilling thousands of shipments and generating millions in sales a week. He said sales volume is doubling every quarter but declined to provide figures. Consumer majors Unilever and Anheuser-Busch InBev have signed on as customers.
Convoy initially required pick-ups to originate in the US Pacific north-west and has since expanded to several other regions. It plans to use the new funds to go further, with operations in the north-east, mid-Atlantic and the south over the next year. Funds will also go toward software development. Mr Lewis declined to comment on Convoy’s valuation.
The new funding was led by Y Combinator’s Continuity Fund. It is the first time the Silicon Valley firm has invested in a company that was not incubated in its start-up programme. “The market opportunity is huge, and trucking is a space that has not had any innovation in two decades,” said Anu Hariharan, a partner at the Y Combinator venture fund.
The US trucking market is worth about $800bn, and it is rife with inefficiency. Mr Lewis said trucks are driving without cargo more than 30 per cent of the time, often after returning from a drop-off. He positions his company as a way to cut costs and pollution, a proposition that has attracted not just marquee investors but also a number of competitors. Some have already become road kill.
The threat of automation is looming over the trucking industry, with predictions that self-driving 18-wheelers will replace the large workforce in the future. Mr Hariharan said software to match trucks with jobs and track progress will be necessary, “regardless of who is driving the truck – man or machine”.
Trucking, even the software-enabled variety, may seem like an antiquated industry for a tech leader like Mr Gates, but the world’s richest man often leans toward investments in more traditional industries like rail, trash and tractors. He is the biggest single investor in Canadian National Railway and Deere. A spokesman for Mr Gates’ investment firm said Convoy’s promises to reduce road congestion and help the environment were major draws.
Updated: July 25, 2017 04:29 PM