Supply Chain Matters highlights a breaking news development related to Seattle based trucking based Cloud platform provider Convoy.
Bloomberg, The Wall Street Journal and other industry specific media are reporting that Seattle based digital freight start-up services provider Convoy is preparing for a possible sale or other action.
Bloomberg has reported (Paid subscription) that the start-up, backed by investors including Jeff Bezos and Bill Gates “will slash hundreds of jobs in the coming days as it prepares to woo prospective buyers, according to a person familiar with the matter.”
The Wall Street Journal report (Paid Subscription) indicated that the digital freight start-up “that has drawn a star studded lineup of tech investors has suspended operations and is winding down its core business as it seeks alternatives that may include selling its technology, according to people familiar with the matter.”
Both reports cite declining freight industry demand and increased competition among start-ups in this digital freight and logistics segment.
Reportedly, the company informed its customers yesterday via email that the firm could not accept new business and that existing orders due to being picked up in the next three days should be cancelled.
Convoy has previously initiated several rounds of headcount reductions reducing this start-up’s overall workforce from a peak of 1,500, to an existing 500 workers.
In late August, our Supply Chain Matters This Week in Supply Chain Tech column highlighted reports that that innovative digital freight brokerage start-up was exploring strategic options. A report initially published by The Information and subsequently industry publication Freightways, cited sources indicating that this provider had taken this action.
Supply Chain Matters This Week in Supply Chain Tech first cited Convoy in November 2019 when the company raised $400 million in a Series D funding round that valued the digital brokerage firm at $2.7 billion. At the time, total capital raised was in excess of $669 million. The company, founded in 2015, competed with other attractively funded start-up firms such as Transfix, Uber Freight and others, as well as established truck brokers such as C.H. Robinson and Echo Global Logistics.
In April of 2022 this tech provider raised $260 million in added funding, comprised of a $160 million Series E preferred equity round led by Baillie Gifford and funds and accounts advised by T. Rowe Price Associates, 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.
Among noted lighthouse customers are Anheuser-Bush, Home Depot, Procter & Gamble and Unilever.
Existing reports are consistent in their reporting that this additional headcount reduction is part of an effort to seek a potential industry buyer, either on the services or technology spectrum.
Supply Chain Matters has recently highlighted other retrenchment and headcount reduction actions taken by on-demand warehousing and logistics services Cloud platform provide Flexe, and the forced resignation of both the CEO and CFO of freight technology start-up Flexport.
A further related and recent development was the announced interim CEO announcement involving E2open Parent Holdings in conjunction with the reporting of the platform provider’s fiscal Q2 2024 financial performance that included lackluster growth in revenues and profitability levels.
The logistics start-up segment remains under pressure and the growing likelihood of technology consolidation appears to be occurring.
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