Flexport raises $110M at $800M pre to become a real freight company

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.

That digitizing paper freight forwarding beats entrenched giants, so Flexport had to become a real carrier, funded at a manageable $800M pre-money, not a riskier $1B+.

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.

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.

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.

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.

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.