Logistics technology provider Cargomatic Inc. said Wednesday it has raised $35 million in funding that is intended to fuel the firm's expansion to new markets in the U.S. and abroad, marking a comeback for a startup that has been fighting for a place at the table in the crowded "Uber for Trucking" segment.
The new funding round was led by private equity firm Warburg Pincus, along with participation from venture capital firms Canaan, Xplorer Capital, and Muse Family Enterprises, as well as Genesee & Wyoming Inc., a Darien, Conn.-based freight railroad operator. Earlier funding rounds have included $8 million in 2015 and an unspecified investment in February by Genesee & Wyoming, that said it planned to add the Cargomatic platform to its U.S. rail service network in order to improve the efficiency of first and last mile logistics between rail and road, and to simplify multimodal touchpoints.
Venice, Calif.-based Cargomatic plans to use the latest funding to fuel its plans for geographic expansion, hire employees, and support its next phase of growth, the firm said. Cargomatic did not specify its expansion plans, but the company said in February that it planned to expand internationally to Europe and Australia.
Cargomatic did not reply to requests for comment.
The company's product is a smartphone app that connects shippers, receivers, and carriers in the short-haul and drayage trucking markets, helping users cut back on the traditional process of relying on calls, emails, and faxes to book freight transactions, according to Cargomatic.
Cargomatic is focused on the small-fleet trucking companies that handle 80 percent of deliveries in metropolitan markets, CEO Richard Gerstein said in a statement. Cargomatic now operates in Los Angeles, San Francisco, Chicago, Florida, Seattle, Dallas, Houston, and New York, and says its users include shippers, manufacturers, retailers, and third-party logistics providers (3PLs).
Cargomatic has weathered rough results since launching in 2014, including a period in 2016 when the firm laid off half its staff and saw the resignation of its CFO.
One industry analyst contacted for this story questioned why investors would continue providing funds for a provider of a load matching app when several competing firms offer comparable products. However, the source noted that the freight market's capacity shortage is creating escalating demand for services that help shippers cope with the rising costs of guaranteeing contractual capacity.
Lead investor Warburg Pincus hinted at its answer to that question in a statement calling Cargomatic's app an effective technology platform that standardizes driver onboarding and that can be quickly deployed into new markets in order to support communication between trading partners. "Now more than ever, the use of technology is critical for the logistics industry to increase efficiency, reduce costs, and create more coordinated, streamlined operations," Warburg Pincus Managing Directors Alex Berzofsky and Vishnu Menon said in a joint statement.
