The Silicon Valley freight forwarder recently confirmed a long-known Series C funding of more than $110 million and a $800 million valuation, a sign that investment in logistics technology is accelerating.
The freight forwarder Flexport on Friday announced the one of the worst kept secrets in the logistics technology world over the past two week, confirming it had received a new funding round of $110 million.
The new round, called a Series C in the venture capital world, brings the amount invested by VC firms into Flexport to more than $200 million. The deal also slaps an $800 million valuation on the Bay Area, Calif.-based company, $910 million including the latest funding round.
Flexport has grown rapidly since its founding in 2013. The company was built on the notion that established freight forwarders were weighed down by antiquated backbone systems, and that a new company, unburdened by those systems, could take advantage of new technology to work more efficiently and on smaller margins.
The company has long straddled the perception line between pure technology startup and pure freight forwarder, but its addition of warehouse facilities in mid-2017 likely started driving that perception toward the company being seen as a service provider.
The latest funding round was led by DST Global, while other previous investors Founders Fund and Susa Ventures also took part. Rahul Mehta of DST Global will serve as an observer on Flexport’s board of director
“We raised this round because we have proof that our model works, and that means it’s time to double down,” Chief Executive Officer Ryan Petersen said in blog post on the company’s website.
Flexport last raised money in September 2016.
Some founders of other tech startups noted last week that the size of the round and valuation were proof that the current wave of technology providers were getting the scale to be noticed.
In many ways, Flexport has become the face of the latest startup-based logistics technology movement through a mix of savvy marketing and a focus on replacing traditional processes with more efficient ones.
The valuation – $800 million on a reported $500 million in expected revenue this year – represents the company’s place in the overlap between logistics provider and technology provider markets. Two other logistics startups, when asked by American Shipper about the multiple, said it represented a middle ground between a pure technology play and an established service provider with actual revenue.
Making a comparison between the valuation and revenue is a bit tricky, however, since established freight forwarders would be more likely to be valued on their gross profit or net revenue than on gross revenue. Startups, however, are typically valued on their revenue since they may not yet be profitable.
It’s hard to determine Flexport’s gross profit since the company is private, but based on a conservative estimate of its likely margin, the $800 million valuation would be three to five times higher than that of established top global freight forwarders.
As one analyst put it to American Shipper, investors are paying a growth premium in line with Flexport’s status as a tech startup.
Flexport was one of four companies to watch that American Shipper chronicled in October 2016.
Flexport’s VC funding surpasses $200m mark
