The archive · Logistics & Supply · Financial decision · 2013–2017
Flexport raises $110M at $800M pre to become a real freight company
Freight forwarder Flexport raised $110M at an $800M pre-money valuation in 2017, rejecting $1B+ offers, to fund becoming a real carrier, not just software.
Flexport
What the business is
Flexport is a freight forwarder that moves shipping containers around the world, combining logistics software for tracking and optimization with the actual forwarding service and earning roughly 15% of the average $2,000 cost to move a container.
How it started
After growing up importing scooters from China and selling them online, Ryan Petersen spent two years in Chinese supply chains, co-founded ImportGenius to index shipping manifest data, and concluded that freight forwarding itself was antiquated. He started Flexport in 2013, took it through Y Combinator, and by mid-2016 it had moved freight to or from 64 countries for more than 700 clients, with investors including Founders Fund and GV.
What happened
Flexport raised a $65M Series B in September 2016 at a $365M valuation, bringing total funding to $94M at that point. In September 2017 TechCrunch reported from five sources that Flexport had closed a $110M Series C at an $800M pre-money valuation — mostly existing investors including DST — after declining offers above $1B to avoid a down-round if the market stumbled. The company had over 400 employees in seven offices, expected roughly $500M of revenue in 2017, had cut five days from less-than-containerload shipments, and was earmarking capital for its own cross docks in Hong Kong and Los Angeles: the shift from bits to atoms.
No ending yet — it is still running.
Background
Flexport is a freight forwarder: it moves shipping containers around the world, combining logistics software with the actual forwarding service, and taking roughly 15% of the average $2,000 it costs to move a container versus about 25% for competitors. The bet recorded in its 2017 Series C was that a trillion-dollar industry still run on paper, Excel and fax would fall to software — and that the winning move was becoming a real freight company, not staying a pure software layer.
Ryan Petersen had grown up importing scooters from China to sell online, spent two years in Chinese supply chains, and co-founded ImportGenius to index public shipping manifest data. That showed him how antiquated freight forwarding was, so he started Flexport in 2013, took it through Y Combinator, and by 2016 it was moving goods for more than 700 clients across 64 countries, with investors including Founders Fund and GV.
In September 2017 TechCrunch reported, from five sources, that Flexport had closed a $110M Series C at an $800M pre-money valuation — mostly existing investors including DST — after turning down offers above $1B to avoid a down-round if the market stumbled. The company had more than 400 employees in seven offices, expected about $500M of revenue in 2017, had cut five days from less-than-containerload shipments, and was earmarking the capital for cross docks in Hong Kong and LA: the shift from bits to atoms.
What has to be true
- Freight forwarding is a trillion-dollar market whose core workflow was still paper, Excel and fax, so the software opportunity was huge and unclaimed.
- Flexport married data and execution: its software optimized routing from its own shipment data, shaving five days off LCL travel, while older competitors ran on hunches.
- Incumbent forwarders predated Netscape and could not rebuild on new technology, and giants like DHL had already failed at big IT overhauls.
- Petersen took less money at a lower valuation than investors offered, protecting against a future down-round while still funding the move into real freight operations.
What can be applied
Boring industries hide the biggest software gaps, and founders who take a manageable valuation to avoid a future down-round are betting on the long game, not the headline.
Aftermath
As of 2017-09-22 Flexport was scaling hard off the new round: more than 400 employees in seven offices, cross docks open in Hong Kong and Los Angeles with plans for a global network, roughly 15% take on the average $2,000 container move versus 25% for competitors, and an expectation of about $500M of revenue in 2017. Petersen framed the Series C as funding the transition from a pure software company to an actual freight company — bits to atoms — while TechCrunch noted that at least 57 existing investors were shut out of the round and sources described Petersen as a machine.
Sources
- Freight startup Flexport soars from 'unsexy' to $800M valuation
- The unsexiest trillion-dollar startup
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