Cargomatic gets $8M to modernize the trucking industry
The company wants to be "Uber for trucking" by giving both truckers and shippers mobile tools
The local trucking industry is estimated to be worth $70 billion. And while small-fleet trucking companies handle 80% of deliveries in metropolitan markets, there's still no easy way to quickly connect shippers with truckers in their immediate vicinity who available cargo space.
To put it bluntly, the trucking remains very antiquated, reliant on rolodexes, landlines and paperwork. But Cargomatic, an app that instantly connects local shippers with local truckers, wants to change that once and for all, and has just raised an $8 million dollar Series A funding round to do it, it was announced on Thursday.
The round was led by Canaan Partners, and was joined by other investors including Volvo Group Venture Capital, Rob Estes of Estes Express, Morado Venture Partners, SV Angel, Sherpa Ventures, Winklevoss Capital, Structure Capital, Nicolas Berggruen, Scott Banister, Fritz Lanman, and Hank Vigil. This round brings the company's total financing to $10.6 million. It had previously raised a $2.6 million seed round last year.
Launched in January of 2014, Cargomatic seeks to be the company that finally pulls the trucking industry into the 21st century.
"At Cargomatic, we are streamlining this industry with a desktop and mobile app that provides an easy, Uber-like experience," Jonathan Kessler, CEO and co-founder of Cargomatic, told me in an interview.
"We're making shipments more efficient from both ends, helping retailers, manufacturers, and other businesses get shipments out the door and on their way quickly, and helping truckers make more money and be more efficient with their time and cargo space by allowing them to take advantage of previously empty, underutilized space."
The typical Cargomatic customer uses the app for short-haul shipments, typically within a 150 miles radius, and its truckers are typically small business owners who have a small fleet of trucks, between three and 10. It's customers include Perry Ellis, Polaris, Signal Brands, Hudson Jeans and Rachel Zoe Inc.
By using Caromatic truckers are able to eliminate the need for paperwork by expediting shipping documents and payments online. Shippers can track the location of truckers in real time and get notified upon arrival and delivery. Truckers also benefit by better utilizing the capacity on their trucks and reducing the “deadhead” miles where they are driving around with empty space.
For example, Joe / Hudson Jeans and Signal Products (Guess) use Cargomatic to feed their ecommerce networks and deliveries to their retail clients in real time.
Cargomatic isn't the only company that is seeking to modernize the trucking industry; companies like Transfix and Roadie are also doing the same thing, though, according to Kessler, "their business model is distinctly different from ours."
"Cargomatic is a B2B service, focused on providing businesses access to reliable truck drivers who are available for short-haul deliveries on short notice. We feel that's where the greatest opportunity lies, as well as the greatest market density," he said. "While other companies are emerging in this space, we don't consider them competitors because they are focused on long haul trucking and their business model is distinctly different from ours"
The other advantage for Cargomatic is its experience, as co-founder Brett Parker has 15 years of experience in logistics and his family has been in the trucking business for 40 years.
"We're approaching this industry from the inside out. Who better to solve problems for truckers than people who have actual experience in the trucking industry?" said Kessler.
The new funding will go toward hiring more employees in engineering and sales, but the main goal with this financing is to expand to new markets. The company is currently operating in Southern California and in beta in the NYC/Tri-State Area, but it is looking to expand to other metropolitan markets and transportation hubs such as Chicago, Dallas, Atlanta and Miami.
"One of the things we are attempting to do is democratize technology within the transportation sector. Many small-fleet truckers are first-generation Americans or recent immigrants with limited technology experience. Cargomatic empowers them to benefit from mobile technology for the first time in their professional lives by helping them to better utilize the space on their trucks and ultimately make more money to grow their small businesses," Kessler told me.
"Cargomatic is bringing the best of tech and logistics together, and we're really excited about the future of this space. We're really excited about the future of this space, and also about being backed by Canaan Partners. Canaan has a history of investing in successful on-demand marketplaces and in great emerging LA companies like Instacart, Lending Club, Washio, and Relay Rides, and we're thrilled to be joining their ranks."
