Is freight company Convoy eyeing US IPO after latest funding round?

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Is freight company Convoy eyeing US IPO after latest funding round?

Is freight company Convoy eyeing US IPO after latest funding round?
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Highlights 

  • Convoy is a digital freight broker company.
  • Its mobile app connects shippers and freight brokers to a network of 400,000 trucks in the US.
  • The company is valued at US$3.8 billion after the latest funding round.

Digital freight company Convoy said on Thursday that it raised US$160 million in a funding round led by Baillie Gifford and T Rowe Price Group Inc., giving it a valuation of US$3.8 billion. 

The Seattle, Washington-based company also said that it secured a US$150 million line of credit from J.P. Morgan and raised an additional US$100 million from Hercules Capital Inc. in a venture-debt investment, bringing the total capital raised to US$260 million.

The firm is now valued at US$3.8 billion, raising its possibility of going public as a natural progression. Its total equity and venture debt were US$928 million after the new funding. 

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Some of its known backers include Bill Gates, Jeff Bezos, Mark Benioff, and startup fund Y Combinator. The company intends to use the funds to hire more employees and expand its freight services in the backdrop of evolving opportunities due to supply chain issues.

Convoy’s mobile app connects shippers and freight brokers to a network of 400,000 trucks in the US. It now plans to expand its fleet for the ‘Convoy Go’ service by 35% - 40% by 2022 end. 

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The company has some 200 openings, of which 50% are in technical domains, such as data science and engineering. According to WSJ, Convoy currently has 1,300 employees. 

However, the company hasn’t earned any profit yet but expects revenue to cross US$1 billion in 2022 compared to roughly US$750 million in the previous year.

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Is freight company Convoy eyeing US IPO after funding round?

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IPO plans:

Although the company hasn’t officially revealed any IPO plans, its co-founder and CEO Dan Lewis said it is the most likely path in the coming years, Reuters reported.

President and COO Mark Okerstrom also said that an IPO could be a “very logical step down the road”, adding that the Convoy is presently focused on organic growth.

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Bottom line:

Although freight demand has been increasing with the surge in e-commerce, freight rates have been falling in the spot market for trucking services targeted by brokers. Still, deal-making and acquisitions continue in the sector. In 2021, Uber Technologies Inc’s Freight unit acquired Transplace, a logistics service provider, to add to its load-matching service.

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