Trucking is the dominant mode of freight transport in the United States and the total addressable market exceeds $800B per annun. However, the logistics industry has traditionally relied on disparate means (faxes, emails, and spreadsheets) to manage the many moving parts involved with shipments. Loadsmart, a freight management platform and marketplace, automates how freight is priced, booked, and shipped. In fact, 85% of Loadsmart’s revenue is generated (quoted and booked) leveraging full automation. Loadsmart serves approximately 25% of Fortune 100 companies and has grown 250% in revenue since January. The company just announced that it has expanded into multimode transportation using rail and now offers the ability to book shipments that are less than a full truckload.
AlleyWatch caught up with Hunter Yaw, VP of product management, marketing, and sponsorships, to learn more about Loadsmart’s impact on the logistics industry, expansion plans, and recent round of funding, which brings the total funding raised to $146.4M for the company founded in 2014.
Who were your investors and how much did you raise?
We raised $90M in our Series C funding round. The effort was led by BlackRock Inc.’s Innovation Capital arm and includes investments from Chromo Invest, TFI International Inc., and Maersk.
Tell us about the product or service that Loadsmart offers.
Loadsmart is a technology company leveraging AI, machine learning, and other technologies to automate how freight is priced, booked, and shipped to streamline the historically tedious process of navigating the supply chain.
At its inception, Loadsmart offered 100% guaranteed acceptance and instant real-market pricing for Full Truckload shipments using the free web interface on Loadsmart.com. For much of the last five years, Loadsmart worked to deliver these real-time rates directly into shipper Transportation Management Systems via API. Loadsmart was the first to integrate with one of the largest TMS in Oracle and has since expanded to industry leaders like BlueYonder and MercuryGate.
The proceeds of the Series C round will allow Loadsmart to better serve shippers through doubling down on the tools to deliver excellent operational performance, as well as an expansion of value-added services like mode optimization, price transparency, and data insights on supply chain optimization opportunities.
We saw first-hand the inefficiencies in the supply chain back in 2014, which was operating using technology that was available since the 90’s: emails, phones, and fax machines. Given the size of the market and fragmentation of the industry, we saw great potential ahead.
How is Loadsmart different?
The digitization of freight, enabled by Loadsmart integrations allows rates, tenders, tracking, and invoicing to flow automatically between Loadsmart and the customer, delivering efficiency with unmatched transparency and visibility into shipments. We also have the highest percentage of employees in software development and data science roles in the digital freight industry, allowing us to create and deliver best-in-class technology solutions.
What market does Loadsmart target and how big is it?
Loadsmart services a range of customers within the vast transportation industry, including small to mid-size shippers and carriers within retail, food and beverage, grocery, manufacturing, industrial, consumer packaged goods, and more. The total addressable market for trucking is estimated around $800B. The full truckload market is valued at $300B while the less-than-truckload market is closer to $60B. The company also serves approximately 25% of Fortune 100 companies.
What’s your business model?
In developing the technology to provide true value-added services to its customers, Loadsmart has cemented its position as a market maker in this sector, with growth revenues of 250% since January 2020. Part of Loadsmart’s business model provides customers with guaranteed, instantly bookable rates so they avoid the costly spot market while Loadsmart manages the risks associated with the operation.
How has COVID-19 impacted the business?
At Loadsmart, we’ve found that COVID-19 has accelerated the technology adoption curve significantly. Our integration adoption rate in Q2 was higher than all of 2019 combined, further attesting to the industry’s desire to advance and optimize operations through the use of advanced technology.
Prior to the pandemic, the long-overdue digital transformation was pushing a secular shift from analog to digital and brick-and-mortar to online. COVID accelerated a process that might have taken two years to a matter of months. Companies that invested in technology early were better positioned to weather the storm caused by the pandemic, and we truly believe others must act now or be left behind.
What was the funding process like?
We had an incredible team that allowed us to succeed in a complicated fundraising landscape. The deal also had participation from Perry Capital, founded by Richard C. Perry; and Bramalea Partners, recently founded by Andrew Boyd, former head of global equity capital markets at Fidelity Investments. Goldman Sachs & Co. LLC served as Loadsmart’s financial adviser and Paul Hastings as its legal adviser.
The process took most of this year, but a true team effort both internally and with external partners allowed us to push through the round and complete a successful Series C.
What are the biggest challenges that you faced while raising capital?
This year, we were forced to respond quickly to the new normal and shift our communications to 100% virtual. It was challenging to drive increased revenue while conducting all sales meetings virtually. Forming connections online can feel inauthentic, especially when we’re used to shaking hands and meeting face to face.
Small and medium-sized businesses have been hit especially hard during this pandemic, forcing them to contend with financial constraints, which in turn impacted the freight industry. However, a tumultuous market only furthered the value of our technology and exemplified the core of our business – to seamlessly and efficiently move more with less.
What factors about your business led your investors to write the check?
In addition to remarkable growth and customer buy-in, we recently became the first digital freight solution to offer truly multimodal solutions by expanding our Multimodal Services offering to include less-than-truckload (LTL) and rail. We now enable customers to book shipments in North American across all major transportation modes, building on our existing capabilities for Full Truck Load (FTL), port drayage, and transload. Our ability to master this incredibly complex system made us attractive to investors with eyes on the digitizing transportation sector.
What are the milestones you plan to achieve in the next six months?
We plan to use the investment to better service our customers by doubling down on providing great service to our shippers, which means more accurate, real-time tracking, automated pickup/delivery appointment scheduling, and new tools to anticipate operational challenges; and providing data insights to shippers and carriers so we can improve together, which means instantly bookable rates across multiple modes, analysis of factors impacting on-time delivery & pick up, and tools to get more value from Transportation Management Systems.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Focus on the fundamentals of your business and building a world-class team. For the first five years of our journey, we didn’t have the fresh injection of capital in the bank compared to some of our competitors. What we did have was an obsession with building a world-class team and growing a fiscally responsible business. While we grew at a more conservative rate compared to some of our competitors because of this, our 250% growth in revenue since January and completion of the 90M investment round led by BlackRock is validation that a long, strategic approach to the problem you are trying to solve will be recognized with capital in due time.
While we grew at a more conservative rate compared to some of our competitors because of this, our 250% growth in revenue since January and completion of the 90M investment round led by BlackRock is validation that a long, strategic approach to the problem you are trying to solve will be recognized with capital in due time.
Where do you see the company going now over the near term?
As the industry shifts from analog to digital, we see Loadsmart as the leading digital freight technology solution. Our vision of offering end-to-end digital logistics services will continue to improve as we lean into the latest cutting-edge technologies and further integrate this with our expansive network. The remarkable growth we’ve experienced since our Series A investment, coupled with the strength of our investor network, primes Loadsmart for continued growth and success.
What’s your favorite outdoor dining restaurant in NYC?
Speedy Romeo in Clinton Hill.
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