Once a cost base for businesses, last-mile delivery has gradually transformed from an afterthought into a nearly $200 billion industry. Investors, unsurprisingly, are taking notice.
Bay Area-based Onfleet is the latest last-mile company to pick up a lucrative funding round, raising $23 million in a Series B led by Kayne Partners with participation from existing investor Savant Growth. Onfleet will use the funding to expand its team and enhance its software platform with new technology and engineering capabilities. It has raised over $40 million to date.
“This new round will help Onfleet accelerate innovation in several key areas and broaden our product offering so we can help existing customers scale their operations while expanding in new markets,” said Onfleet CEO and co-founder Khaled Naim. “The funding will enable us to accelerate the growth of our team and invest even more in our machine learning, route optimization and workforce management features.”
Naim and his co-founders launched Onfleet in 2015 as a dashboard for dispatching. Through the platform, users can optimize routes and search for drivers, receiving AI-powered recommendations based on factors like time, location, capacity and traffic.
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For customers, the platform provides real-time insights like driver tracking and proof of delivery. Managers can also chat with drivers on the platform and view performance metrics like on-time rates and feedback scores. Onfleet counts Kroger, Gap, Total Wine & More and thousands of other businesses as clients.
“As the largest traditional brick-and-mortar grocery chain in the country, we have an enormous opportunity to serve even more consumers with a stellar delivery program. Integrating the Onfleet platform into our systems has allowed us not only to expand our reach, but it has also helped us better track our orders in real time and ensure our customers are getting their deliveries in an efficient and timely way,” said Ryan James, senior manager of operations innovation at Kroger.
The investment in Onfleet comes as the last-mile delivery market continues to accelerate. Per Statista, the industry will add more than $200 billion in value between now and 2027, driven heavily by e-commerce growth. Onfleet says it already has completed more than 150 million deliveries, and hundreds of millions more are on the horizon if conditions hold.
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“Last-mile delivery has become a near indispensable service over these past few years, and our research shows no signs of it slowing down,” said Kayne Partners Managing Director Robert Shilton, who will join Onfleet’s board of directors. “We see a tremendous opportunity for more enterprise businesses and SMBs to use Onfleet’s software to take ownership over their own delivery experience. This investment will help the company build on its platform, reach large retail enterprises and continue Onfleet’s exceptional growth.”
A large part of Onfleet’s philosophy is sustainability, which is inextricably linked to the transportation industry. According to the Environmental Protection Agency, the sector comfortably accounted for more than a quarter of U.S. greenhouse gas emissions in 2020, topping all other industries — including electricity. More than half (57%) of those emissions come from light-duty vehicles, which are used heavily in the last mile.
To counter that impact, Onfleet launched the Onfleet Offset program in April 2021. The platform calculates its customers’ CO2 emissions and automatically offsets them by purchasing nature-based carbon credits — typically, those credits support the planting of trees. Onfleet also matches carbon credits 1:1, thereby doubling the impact of the offsets.
The company’s offering also includes free driver apps for both Apple and Android users. The apps provide drivers with real-time data and insights and allows them to chat with the Onfleet team. The company says it’s looking to expand its team from 120 to 150 people by year’s end.
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