SoftBank makes another bet on freight shipping technology2 min read . Updated: 03 Dec 2020, 11:13 AM IST
- Volvo also joins the financing as sector has remained resilient during pandemic
SoftBank Group Corp. is doubling down on its bet that technology startups will reshape freight shipping and logistics, a sector that has been an ambitious focal point for the firm.
Through its Vision Fund 2, the Japanese firm led a $113.5 million investment in Flock Freight, a U.S. software startup that offers a service that uses algorithms to match trucks with freight headed in the same direction. The service, intended to optimize trucks’ shipping capacity, is akin to a ride-hailing company’s pooled services that match riders in the same vehicle based on their pickup and drop-off locations.
The deal values Flock Freight at roughly $500 million, according to a person familiar with the matter.
Volvo Group’s venture-capital arm joined SoftBank in the financing. The Swedish-based company is one of the world’s largest heavy-duty truck manufacturers and is planning to collaborate with the startup and help improve its technology, said Martin Witt, the head of Volvo Group Venture Capital.
For SoftBank, the investment is the latest in a string of bets on startups attempting to overhaul how cargo moves across the globe. The firm has seeded businesses across geographies aiming to introduce technology to various logistics processes.
The so-called logistics technology sector in recent years has been a growing target for venture-capital investors who believe the risk-averse industry has been slow to innovate. This year, the pandemic’s strain on supply chains further spurred investment into startups aiming to improve efficiency. Deal activity in the sector is on pace to increase 12% this year, according to analytics firm CB Insights.
As part of the Flock Freight financing, SoftBank Investment Advisers Managing Partner Ervin Tu will join the startup’s board.
“Our investment is intended to accelerate the company’s ability to scale its business and capture a greater share of the market," Mr. Tu wrote in a statement announcing the deal. A SoftBank spokesman declined to make Mr. Tu available for an interview.
Solana Beach, Calif.-based Flock Freight’s algorithms propose shared truckloads for its customers, which are mainly manufacturers, shippers and distributors. The company began operations in 2015 and focuses on medium and long-haul routes in the U.S., Flock Freight founder and Chief Executive Officer Oren Zaslansky said.
Sharing truckloads speed delivery by eliminating the need to stop at terminals to unload and reload cargo, Mr. Zaslansky said. He added that sharing truckloads also reduce the likelihood of cargo being damaged en route to its destination and is more environmentally friendly.
Flock Freight, which raised $50 million in February, generates revenue by charging shippers a variable cost on each shipment moved.
The company will dedicate a chunk of the new capital to research and development and to hiring machine-learning specialists to help build out the freight-matching algorithms.
“The technology requirements are really brutal," Mr. Zaslansky said, adding that introducing more customers will enable it to expand its pooled offerings. “We have to scale up."
Other investors in the Series C funding round include Alphabet Inc.’s GV, venture firm SignalFire and GLP Capital Partners.
SoftBank’s other recent logistics bets include its participation in a $1.7 billion financing for Chinese startup Full Truck Alliance this fall, which has built a mobile app that connects businesses looking to ship cargo to truck drivers. In September, a SoftBank venture division in Asia participated in a $100 million financing into Indonesian logistics tech startup Waresix. And in 2019, SoftBank led a $1 billion financing for shipping broker startup Flexport Inc.
This story has been published from a wire agency feed without modifications to the text.
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