Convoy Inc., a trucking technology developer backed by Bill Gates and Jeff Bezos, added another prominent backer through a funding round that values the startup at more than US$1 billion.
Convoy said it raised US$185 million in a Series C financing led by CapitalG, Alphabet Inc.’s growth equity fund. CapitalG partner David Lawee will join Convoy’s board. It’s the second time in a year that Google’s parent company has put money into one of Uber Technology Inc.’s rivals.
Other new investors in the round include T. Rowe Price Group Inc., led by Henry Ellenbogen, and Lone Pine Capital LLC, led by Mala Gaonkar. Existing investors, Greylock Partners and Y Combinator, also participated. Convoy has raised more than US$265 million so far.
Three-year-old Convoy makes software that matches shippers to truckers, similar to how Uber and Lyft Inc. connect riders to available drivers. The company says its technology helps shippers get better pricing and track deliveries, and lets small trucking companies plan jobs better. Truckers also save money when the system gives them a load to haul on return journeys, rather than driving back empty.
Lawee said CapitalG has been looking at Convoy for a few years, attracted by the opportunity to iron out inefficiency in the trucking market. The startup has recently shown that it can improve on-time rates for shippers and fill a larger percentage of requests, and that progress persuaded CapitalG to finally invest. "It's no longer a theory that they could drive efficiencies," he said. "They are actually driving efficiencies.”
The company plans to use the money to expand. It operates in all 50 U.S. states but needs to build volume in some newer regions, like the Southeast. Convoy will also invest to improve algorithms that help decide how much to charge shippers and how much to pay drivers, as well as software it’s offering to drivers and trucking companies to make their processes easier and more paperless.
"When you think about what sucks about being a truck driver and what sucks about being a shipper, we want to actually build a bunch of software that solves a lot of those problems," said Dan Lewis, co-founder and chief executive officer. "When we do that, companies are more excited about working with Convoy." Convoy has more than 500 customers, including consumer giants Unilever NV and Anheuser-Busch InBev SA.
Convoy has attracted a laundry list of blue-chip backers that includes Salesforce.com Inc. Chief Executive Officer Marc Benioff, KKR & Co. co-CEO Henry Kravis and IAC/InterActiveCorp. Chairman Barry Diller. While Uber is one of its main rivals, that company’s co-founder Garrett Camp was an early Convoy investor, as is current Uber CEO Dara Khosrowshahi.
Alphabet and Uber have a fraught relationship. The internet giant’s venture arm was an early Uber investor. Later, Alphabet’s self-driving unit Waymo sued Uber. Last year, Alphabet backed Uber’s main U.S. rival, Lyft.