Traditionally heavily reliant on a pen and paper model, the freight forwarding and logistics industry has long been plagued by a lack of digital adoption and disparate workflows, despite trillions of dollars of annual trade. As the pandemic is testing the resiliency of global supply chains, the industry is rapidly evolving to address today’s challenges. Nuvocargo is an all-in-one digital platform that’s focused on cross-border trade via trucking between the US and Mexico, an $800B+/yr market. The company offers freight forwarding, customs brokerage, insurance, and also offers trade financing solutions including factoring for carriers that leads to expedited payments, in less than 48 hours. Since its Series A in April, Nuvocargo has expanded its team to 80 from 30 members with plans to grow to 200+ next year and tripled its revenue. This new funding, pre-empted by Tiger’s interest, comes at a $180M valuation.
AlleyWatch caught up with Nuvocargo Cofounder and CEO Deepak Chhugani to learn more about how his pain point working in his family business led to Nuvocargo, the company’s strategic expansion plans both in Mexico and the US, product roadmap, and latest funding round, which brings the total funding raised to $37.8M.
Who were your investors and how much did you raise?
It is an additional funding round led by Tiger Global Management with participation from The Flexport Fund, Federico Ranero, the COO of $8.7B LatAm startup Kavak, and existing major investors QED Investors and NFX, among others. The total raised was $20.5M.
Tell us about the product or service that Nuvocargo offers.
Nuvocargo is the only all-in-one digital platform for cross-border trade offering freight forwarding, customs brokerage, cargo insurance, and supply chain financing. It combines powerful technology with an exceptional team of experts to seamlessly integrate end-to-end movement of cargo in a single platform.
Nuvocargo acts as an extension of its customers’ team so they can outsource to them all the complexities associated with their US/Mexico cross-border supply chain. It is a trusted partner with dedicated bilingual account managers with years of experience, and all the licenses, compliance requirements, and certifications required to operate on both sides of the border.
What inspired the start of Nuvocargo?
I founded Nuvocargo after personally experiencing the pain of cross-border transport via my family’s Latin America international logistics business, where I learned that freight forwarding was in dire need of digitization. Since starting operations in late 2019, the Nuvocargo team has managed to scale the business and grow consistently in an industry that’s facing unprecedented challenges, starting with the pandemic and going into the supply chain crisis affecting key land, air, and seaports around the globe.
How is Nuvocargo different?
Nuvocargo is singularly focused over-the-road US<>MX cross-border trade, allowing us to move at startup speed in a very complex, usually slow-moving market. Our focus on trucking has allowed us to consolidate dozens of services & vendors from freight, trade finance to insurance and more, under one roof.
We are not a broker or a price comparison tool, but a comprehensive platform for all cross-border shipping needs.
What market does Nuvocargo target and how big is it?
Freight forwarding is one of the few industries that software hasn’t eaten yet. Nuvocargo is modernizing this $2T market that has traditionally relied primarily on paper, faxes, and spreadsheets.
Nuvocargo is focused initially on US-Mexico trade. Mexico is the US’s largest goods trading partner with $800B worth of products moved annually between the two countries, making it the world’s largest inter-country trade lane.
Trucking between the US and Mexico alone is a $40B market. Additionally, Nuvocargo targets the massive market for ancillary revenue streams through its unique offer of cargo insurance, customs, trade finance, etc.
What’s your business model?
We describe ourselves as an all-in-one digital platform for trade across the Americas, starting with US/Mexico trade over-the-road. We are a tech-enabled freight forwarder, therefore our business model today is very similar to that of a 3PL.
We have an asset-light business model and combine the benefits of both domestic and international shipping due to the uniqueness of the US-Mexico trade lane. This gives us higher margins, high retention, and the ability to build a network effect in our marketplace.
What are your post-COVID office plans??
As our team continues to quickly grow in both Mexico and New York City, we have been adapting our office spaces to ensure the safety of all our collaborators. We recently moved to a new office space in Mexico City and are in the process of relocating to our very own space in Soho.
What was the funding process like?
It was a first for us. We weren’t actively fundraising but of course, you’re always meeting funds/investors. This time after we met with John Curtius at Tiger we identified great synergies with the direction in which we want to continue our growth trajectory. The process was really very smooth and we believe Tiger is a great partner to work with. They have incredible global experience and are bullish about the future of Latin America and the transformation of the global supply chain.
It was a first for us. We weren’t actively fundraising but of course, you’re always meeting funds/investors. This time after we met with John Curtius at Tiger we identified great synergies with the direction in which we want to continue our growth trajectory. The process was really very smooth and we believe Tiger is a great partner to work with. They have incredible global experience and are bullish about the future of Latin America and the transformation of the global supply chain.
What are the biggest challenges that you faced while raising capital?
Our challenge was deciding whether it was the right timing. The initial intention was to continue working and growing with the funds from the Series A before moving forward with raising more capital. However, when we learned about Tiger’s interest, we realized that partnering with them was very much aligned with our goals and mission. The decision to go with this additional funding was motivated by our drive to further accelerate our product, company growth, and continue solving pain points to help our customers and generate industry-wide impact.
What factors about your business led your investors to write the check?
This is a pivotal time for supply chains globally, which is opening up huge opportunities for startups innovating in the field. Nuvocargo is very well positioned to lead this transition, which I believe is very exciting for investors. On one side there is the massive opportunity we’re going after and the fact that we’ve emerged as the leaders in our category (digital trade platforms for US<>MX trade). Then, there’s the team we’ve formed to deliver on that promise, with a unique culture that I’m extremely proud of, which combines LatAm + US as well as Silicon Valley + logistics. And finally, the superb growth that we’ve continued to have since our last round.
What are the milestones you plan to achieve in the next six months?
We plan to use the additional funds to keep building towards our vision of modernizing the multi-trillion dollar industry of trade across the Americas and to use these new funds to accelerate our investments in product development, hiring, strengthening our existing carrier and shipper network on both sides of the border, and continuing to build out new products and services on the platform which simplify customers’ lives.
Nuvocargo expects to grow the team to over 200+ employees across USA and Mexico and generate tens of millions of dollars in annual revenue in 2022. It is also developing new revenue streams, starting with add-on financial products for shippers and carriers, targeting the $125B+ market for supply chain finance between the USA and Mexico.
Nuvocargo expects to grow the team to over 200+ employees across USA and Mexico and generate tens of millions of dollars in annual revenue in 2022. It is also developing new revenue streams, starting with add-on financial products for shippers and carriers, targeting the $125B+ market for supply chain finance between the USA and Mexico.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank? As I mentioned back in April, when we raised our Series A, I hesitate to give generic advice. I think one of my biggest concerns in the startup world is how many people give advice without knowing the specific context of who is receiving that advice. Capital needs for a tech startup that is purely software-driven and with high margins are very different from the ones of a capital-intensive business with a physical component. For example, I would suggest CEOs understand what type of capital needs their business has and be smart about funding the business according to that specific sector and business model.
Where do you see the company going now over the near term?
Our vision has always been to build an all-in-one digital platform to simplify trade for businesses across the Americas. One of the biggest components of that vision is deeply rooted in the movement of money and payments for the international supply chain. We’ve taken a huge step towards achieving that mission with the launch of our first financial product for the carriers on the supply side of our marketplace – QuickPay. On average, a trucking company for US/MX trade gets paid 30 to 90 days after the day they deliver a shipment. With QuickPay, Nuvocargo is changing that by offering payments to our carriers 48 hours after delivery, all layered in our software which streamlines this typically analog payment process.
QuickPay is one of many financial and legal products the Nuvocargo team will launch in the near future as we build the first multi-product platform (transportation, software, payments, financing, customs, compliance) for trade across the Americas.
What’s your favorite restaurant in the city?
The Tyger.
