The company this week let most of its employees go, saying it is closing the doors on its core digital freight network business operations “and exploring and evaluating strategic options for what might come next.”
The Seattle-based startup officially launched in 2015 as an “on-demand trucking” company after raising $2.5 million in seed funding from an investment group that included Amazon founder Jeff Bezos and other high-profile investors. Its goal was to disrupt the trucking industry and drive out waste.
Last year, Convoy raised $260 million in a funding round that valued the business at $3.8 billion. Its customers have included major shippers such as Home Depot, Procter & Gamble, Unilever, and Anheuser-Busch.
But the high-flying spot market we saw driven by the supply chain challenges of pandemic has taken a nosedive over the past year or so, and Convoy has gone through several rounds of layoffs over the past 18 months, according to published reports. At the same time, investors have lost much of their taste for startups.
In a memo to employees shared in published news reports, CEO and Co-Founder Dan Lewis explained, “In short, we are in the middle of a massive freight recession and a contraction in the capital markets. This combination ultimately crushed our progress at the same time that it was crushing our logical strategic acquirer — it was the perfect storm….
“We were running up the down escalator…. and it kept speeding up.”
Lewis said company officials had spent more than four months “exhausting all viable strategic options for the business.”
Not all investment in the digital-freight arena has dried up, however. Transfix announced on Oct. 19 that it had closed a new $40 million funding round led by New Enterprise Associates and G Squared, with participation from Canvas, saying it "represents the continued conviction of large institutional investors in the company's business, in an otherwise difficult market."
Convoy provided an Uber-like service for booking on-demand shipments that also allowed users to track shipment location. Carriers were all pre-approved by Convoy and would complete jobs using Convoy’s mobile app, which also doubled as a tool for managing and growing their fleets.
As then chief product officer Ziad Ismail told HDT in a 2017 interview, co-founder Dan Lewis “had some experience in trucking, so while he was working at Amazon, he was looking at what is the next big market that is going to be changed dramatically by technology.
“And the more time we spent looking at trucking, the more we realized it was ripe for disruption,” Ismail said. “We defined the mission for the company as using … technology to drive the industry to reduce waste.”
Since then, however, many more companies offering digital freight matching or digital load matching have entered the industry. We’ve also seen longtime traditional freight brokers transform their businesses with algorithms and AI.
In May 2022, Transparency Market Research projected the digital freight brokerage market to reach $26 billion by 2030, explaining that Increasing capital investments from venture capitalists were leading to the entry of small-to-large players in the digital freight brokerage market.
Updated 10/23/23 to add information about Transfix