Transfix raises $22M as on-demand trucking revs up

Now one of the best-funded startups in a rapidly evolving market based on "Uber for trucking"

Just five days after the last one, here’s yet another funding in the on-demand trucking space.

Transfix, a marketplace for hauling and shipping truckloads, announced today that it has secured a $22 million Series B round led by new investor New Enterprise Associates (NEA) with participation from existing investors, including Canvas Ventures, Lerer Hippeau Ventures, and Corigin Ventures.

The company previously raised a $12 million Series A and $2.5 million seed, bringing its total funding to $36.5 million.

Happily adopting the "Uber for trucks" moniker, Transfix offers a technology platform to connect haulers who have extra space in their truck with shippers who need to find extra truck space.

For carriers or haulers, the draw is simple: make more money by filling up the truck. Transfix, which services the entire continental U.S., promises to match truckers up with good cargo, choosing efficient routes to make sure the truck stays full and only accepting shipments from trusted facilities and professionals.

Through the app, shippers get real-time updates and other relevant information about their shipments. Transfix handles all the pre-approval for carriers, making sure their business and insurance is verified, that they have good references, and that they have a strong safety record.

The company says it works with everyone from small fleets to major shippers. Over email, the company told me that more than 150 companies (mostly very large businesses) ship with Transfix today, through trucking services offered by more than 14,000 drivers. While the app is free, it’s clear that Transfix makes money by brokering deals between carriers and shippers; I asked the company how exactly its business model works:

“Our core product is the marketplace," said Transfix CEO Drew McElroy over email. "The industry standard is to make the difference – about 15-18% - between what the customer is charged and what the truckers get paid. We target about half of the industry standard right now. We also sell a SaaS product on top of the marketplace. Customers can use their own trucks but still get the visibility, tools, etc from Transfix for a ‘per transaction’ fee.“

Transfix says it reaches positive gross margin every month but continually invest in tech and growth.

"Smartphone-based freight brokering is creating new and powerful ways of connecting shippers to carriers, driving a greater degree of transparency, facilitating on-demand logistics, and benefiting both the less-than-truckload and full-truck load markets,” said Wallace Lau, team leader and industry principal at Frost & Sullivan, in a prepared statement.

The analyst must read the news, as we just reported last week that São Paulo-based CargoX closed $10 million in Series B funding for its trucker marketplace in Brazil. Though the round was led by Goldman Sachs, another investor’s name popped out (Oscar Salazar) because he helped build the prototype for Uber in early 2009. So if there’s anyone that knows something about building a powerful, effective software application for the on-demand economy, it’s him.

In addition to CargoX and Transfix, a few other companies have raised venture capital money to service the trucking industry:

• Cargomatic closed an $8 million Series A from Canaan Partners earlier this year.
• Convoy, which services Washington and Oregon, closed a $16 million Series A round from Greylock this past March.
• Trucker Path, whose CEO and founder Ivan Tsybaev spoke at Vator Splash Spring in May, has raised a total of $21.5 million in funding.

It will be interesting to see how each of these companies evolve and compete with each other in the coming years.