CloudTrucks CEO Tobenna Arodiogbu has announced that his company is exiting the factoring business and will be transitioning its current customers with their own authority to RTS Financial in the coming weeks to focus on its core business offerings, Virtual Carrier and Flex.
This news comes amid rumors on social media that the Dallas-headquartered company was shutting down after truck drivers using CloudTrucks’ business services received emails about Overland Park, Kansas-based RTS Financial taking over its factoring business.
In an interview with FreightWaves, Arodiogbu was quick to quash the rumors, stating that VC-backed CloudTrucks made a business decision to “really double down and focus on [our] Virtual Carrier and Flex [offerings] and decided to stop growing the factoring business.”
In July 2022, FreightWaves’ Grace Sharkey reported that CloudTrucks had launched fintech offerings for truck drivers who use its Virtual Carrier leasing program, which included CT Credit, a Visa business card that avoids high-interest rates and fees, and CT Cash, a nonrecourse factoring solution that leverages a Visa Cash card.
“There are no changes to CT Credit,” a CloudTrucks spokesperson said. “We will no longer be offer factoring as a stand-alone service through CT Cash to companies operating on their own authority. CloudTrucks’ Virtual Carrier customers will still receive their instant payments, on-the-job cash advances and fuel discounts directly on CT Cash through our Visa partnership.”
As of publication, a representative with RTS Financial did not respond to FreightWaves’ request seeking comment.
Arodiogbu said in January, more than a year after launching CT Cash factoring services in September 2021, that CloudTrucks made the decision to stop bringing on new customers to its factoring products.
“Our Virtual Carrier and Flex products are still up and running and our transition to RTS will enable us to invest more in those offerings,” Arodiogbu told FreightWaves.
“When we started CloudTrucks, the focus was Virtual Carrier, where we are the trucking carrier,” Arodiogbu said. “We have owner-operators leased onto our authority, and then we help them manage their business from that point on. So they are actually under CloudTrucks’ authority. And you know, we’re a fully functioning trucking carrier.”
According to the Federal Motor Carrier Safety Administration’s SAFER website, CloudTrucks, which updated its MCS-150 form on Friday, has 240 power units and 250 truck drivers. This number is down by about 120 trucks and drivers listed on the CloudTrucks MCS-150 form that was updated in June.
However, Arodiogbu declined to comment on the number of trucks and drivers operating under CloudTrucks’ authority as it’s a “privately held company.”
He added that no employees have been laid off since June, when CloudTrucks, like many other FreightTech companies, were forced to make cuts as a result of the declining freight market.
“We’re very well capitalized. We raised funding to continue to operate the business,” Arodiogbu said. “We’re very long-term focused. We made cuts early in the year when we saw that the market was in a really bad place. We are not seeking additional funding at the moment and are very well capitalized and we will go out for funding if we need to, at any point in the future.”
Founded in 2019, CloudTrucks has raised more than $141.5 million, including $115 million in Series B funding in November 2021 in a deal led by Tiger Global. The company is now valued at about $850 million.
Besides Arodiogbu, CloudTrucks’ co-founders are Jin Shieh and George Ezenna.
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FreightWaves’ Grace Sharkey contributed to this report.
