Friday morning, Uber Technologies (NYSE: UBER) announced that Uber Freight successfully raised $500 million from an investor group led by Greenbriar Equity Group at a $3.3 billion post-money valuation, or roughly three times revenue pre-money. Uber Freight issued Series A equity shares as part of the deal, and Greenbriar Managing Partners Michael Weiss and Jill Raker will join Uber Freight’s board of directors.
Last month, Uber Freight sold its Europe business to sennder, a Berlin-based digital freight brokerage, in an all-stock deal, effectively merging the two companies. Ever since reports that Uber was seeking an outside investment in Uber Freight surfaced in July, rumors swirled in the transportation industry about the ultimate fate of the high-growth, cash-burning digital freight brokerage. Uber Freight reported “adjusted net revenue”—akin to what most 3PLs would consider “gross revenue”—of $211 million in the second quarter of 2020 and an earnings before interest, taxes, depreciation and amortization loss of $49 million.
Now, with what Uber Freight executives call the largest ever capital investment for a minority position in a 3PL, Uber Freight has effectively extended its runway indefinitely as it continues to expand to new markets, ship new technology products and grow operations.
“We got to the point where we have so much scale and very meaningful multiyear deals with enterprise shippers as we play a bigger, critical role in the supply chain, that we wanted to signify that we’re committed to the transformation and a very long time horizon on the business,” said Lior Ron, head of Uber Freight. “We wanted customers to understand that we’re here for the long haul.”
Greenbriar, PE expert in transport, built conviction in Uber Freight
“We are excited to support Uber Freight in the next stage of its development with both our financial investment and our industry-leading experience in logistics,” Weiss said in a statement. “Uber Freight has created an innovative and effective approach to logistics technology that we believe is highly scalable in the coming years. In particular, we believe that carriers and shippers will be increasingly attracted to the convenience and simplicity that Uber Freight offers in a complex marketplace. We are eager to share the extensive knowledge and expertise we have built through our decades-long involvement in the logistics sector.”
The deal was unusual for Greenbriar, which typically makes investments of $75 million to $150 million for controlling positions in founder-owned or family-owned businesses. Greenbriar’s current portfolio companies include Spireon, the trailer telematics and fleet management technology company, and SEKO Logistics, an international freight forwarder. Greenbriar owned a controlling interest in the managed transportation and technology provider Transplace from 2013 to 2017, when it sold to TPG Capital.
North American truckload brokerage remains a deeply fragmented but rapidly growing industry that is experiencing rapid digitization. An investment in Uber Freight, the largest digital freight brokerage by revenue, was likely the best way for Greenbriar to place a very large bet on the future of technology-enabled logistics services.
“We hit it off with Greenbriar — they know logistics in and out,” Ron said. “You need to understand 3PLs, the entire ecosystem, and to have witnessed the transformation in the industry to appreciate what we’re doing. Greenbriar is solely focused on transportation and logistics, they fully understand the 3PL market, and they really appreciate everything we’re doing on the technology side, the team, how we approach problems, and on our end, we really like the value add. We wouldn’t have chosen just anyone — for us Greenbriar was special. Michael and Jill are fantastic; they’ve already given great advice, great insight, and have really been super helpful as we think about the road ahead, as we continue to expand, and they’re going to add a lot of value.”
The conventional wisdom at some large 3PLs was that the high-growth phase of digital freight brokerages was largely over as new entrants sought to rationalize price and stanch cash losses. Publicly traded brokers suggested on analyst conference calls that competitive pressures were easing. That judgement now appears to have been premature.
“We’ve been at it super hard for the past four years,” Ron said, “and this investment allows us to continue doing that. Even in the past year, we still grew at a very healthy pace in a pretty tough, volatile market, when a lot of companies went backwards, and we will continue that.”
A groundbreaking integration of first, middle, and final mile
Ron said that Uber is starting to put the pieces of its various businesses together as it transitions to a delivery-first company. Uber’s Rides business struggled during the COVID-19 pandemic — although it’s starting to recover now — while Eats experienced explosive growth. A new offering, Uber Direct, enables last-mile delivery of any kind of “stuff” to customers’ homes and businesses. Uber Direct is already delivering over-the-counter medication in New York City, mail parcels in Portugal and veterinary supplies in Australia.
Two weeks ago at its shipper conference, Deliver, Uber Freight announced the integration of Direct into its shipper platform. The ultimate goal, Ron explained, is to bring together first-, middle- and final-mile logistics services and offer Freight customers unprecedented visibility into real-time consumer demand. Ron said that, for example, Uber Freight will be able to harvest data from Uber Direct’s grocery delivery business and feed information about demand upstream, past the grocery retailer to the consumer packaged goods or food company itself.
Uber Freight can now sell parcel and final-mile delivery, through Uber Direct, to its truckload freight customers. In a period when big-box retailers are finding traction with e-commerce but still cannot compete with Amazon’s logistics network, Uber’s estimated 4 million-5 million drivers worldwide may provide the enormous final-mile delivery capacity that retailers need to reach consumers at home.
The Uber Freight-Uber Direct integration is the first time Uber has been able to weld its Rides driver network to the Freight business; to date, these businesses have had different customers, capacity and networks that have not overlapped or added value to each other.
Those days are over as Uber Freight, armed with a game-changing new investment, seeks to create truly unique service offerings and customer experiences.