Today, New York City-based logistics technology company Loadsmart announced it raised a $21.6 million Series A. Maersk Growth—the venture investment arm of container freight carrier Maersk—and Chromo Invest co-led the round, according to a statement provided to Crunchbase News. Connor Capital SB participated in the venture deal.
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Including the round announced today, Loadsmart has raised $34.7 million in outside venture funding to date.
Additionally, the company entered into a strategic partnership with Oaktree Capital Management for Loadsmart to help its portfolio companies digitize supply chain and transportation logistics operations.
A spokesperson for the company says the capital will be used to “double down on product and engineering.”
Loadsmart sits in the brokerage part of the logistics system. Basically, freight brokers act as the intermediary between shippers (businesses with stuff to send) and carriers (businesses that send the stuff). And for bridging these two networks, the broker gets a fee.
Not every company is an e-commerce juggernaut, so for small and medium sized businesses it can make sense to work with a freight broker to handle the carrier relationships. For carriers, freight brokers act as a source of business.
How does this work? For a long time, freight brokers were people who kept order books and made phone calls to match shippers and carriers. Loadsmart is one of several companies using software to carry out the market-making service provided by traditional freight brokers. So rather than talking on the phone for hours, digital freight brokerages aim to streamline the experience down to a few clicks or API calls.
Loadsmart’s website touts instantaneous quotes and booking, as well as real-time shipment tracking. Its API can deliver quotes and booking info directly to a third-party transportation management system (TMS).
Logistics startups keep loading up on investor capital as VCs continue shipping it out. For example, Convoy, another digital freight brokerage focused on the trucking sector, closed $185 million in a Series C round which valued the three year old company at over $1 billion.
To be sure, freight brokerage is a well-established industry, but it’s also rapidly digitizing. A recent market research report suggested that the global digital freight brokerage market was valued at approximately $836 million in 2017, but is expected to generate annual revenues of over $21.3 billion by 2026. That would imply a greater than 43 percent compound annual growth rate.
That makes the startup race all the more exciting. Loadsmart and its competition aren’t fighting for a hoped-for, future market. They’re warring over who will lead a key element of a commerce revolution. Expect the external capital to keep flowing.
Illustration: Li-Anne Dias