After reports last week indicating that Seattle based digital freight start-up services provider Convoy was preparing for a possible sale or winding down of business operations there are indications that freight logistics platform provider Flexport will be the acquirer of Convoy’s underlying technology.
The announcement stems from a memo sent from Flexport CEO Ryan Petersen sent yesterday, and subsequently reported by The Wall Street Journal, TechCrunch, GeekWire and other outlets.
There have been no disclosure as to the financial conditions of this sale other than statements from Flexport CEO Peterson indicating that the “purchase price relative to value was modest.” Peterson reportedly further clarified that his company did not inherit the broader financial assets and liabilities of Convoy, including physical assets, real estate or truck trailers.
In April last year, Convoy raised $260 million in added funding, comprised of a $160 million Series E preferred equity round, along with a $100 million venture-debt investment from Hercules Capital. The company further secured a new $150 million line of credit from J.P. Morgan. At that time, Convoy’s valuation was pegged at $3.8 billion.
The Wall Street Journal report indicates (Paid subscription) that Flexport is planning to restore shipping brokerage capabilities for Convoy customers within the coming weeks. Convoy’s Co-founder and CEO Dan Lewis, and “a few dozen” product and engineering employees reportedly will be joining Flexport as part of this deal, according to cited sources of the Wall Street Journal.
San Francisco based Flexport has had its own inherent set of business challenges including the forced and sudden resignation of former Amazon senior retail and operations executive Dave Clark from the company’s CEO role, followed by the forced resignation of the company’s CFO and human resources executive. Earlier this month the tech company announced the layoff of 20 percent of the company’s global workforce.
In its reporting, TechCrunch indicated that in the future, Flexport will offer a full range of trucking services to customers, “including FTL, LTL, drayage (ocean) trucking, cartage (airport) trucking, and eventually intermodal (rail) trucking services to customers of our international freight forwarding services.”
There will obviously be more forthcoming on this set of developments which imply a series of financial and arrangements occurring among various start-up investors.
Bob Ferrari
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