The startup plays is playing in a small but potentially lucrative segment of the retail market: in-car commerce. If you’ve ever been in a Lyft, Uber, or other ride-hailing service, refreshments and treats such as water and gum aren’t uncommon. And for most drivers, the offerings are an inexpensive gesture of good service. But would these drivers give out spendier items like coffee drinks, energy bars, or a spare phone charger to their riders?
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Probably not for free, but Cargo is betting drivers will do so for a price. The startup outfits vehicles with a box of goodies passengers can purchase through the Cargo site. And it’s an idea that has piqued investors interest.
The company filed paperwork with the SEC on Friday indicating it’s raised the entirety of a targeted $22.5 million funding round. According to the filing, that amount includes $1.1 million issued in stock following “conversion of outstanding convertible securities.”
As part of the transaction, Cyan Banister, a partner at Founders Fund, has joined the company’s board. The conversion trigger, size of the round, and new board member suggest the company has raised a Series A round, which hasn’t been disclosed by the company or other news outlets.
Crunchbase News reached out to current board members and executives at the company. The company declined to comment.
39 accredited individuals and institutions participated in the deal, which presumably includes some of its prior investors. Cargo has raised from a wide base of investors including CRCM Ventures, Eighteen94 Capital, Detroit Venture Partners, and Fontinalis Partners, among others.
In 2016, Cargo went through the TechStars Mobility Accelerator in Detroit, Michigan.1 TechStars and TechStars Ventures have followed on the initial investment in the company’s subsequent funding rounds.
According to Crunchbase data and the filing reported above, Cargo has raised at least $31.2 million in known venture funding to date, which is inclusive of the round filed above. The company formally launched in June 2017.
Friday’s regulatory filing lists the company’s current board:
- Jeffrey Cripe, Cargo’s co-founder and CEO. Prior to Cargo, Cripe served stints in brand and ecommerce management roles at Christie’s auction house and Birchbox.
- Jasper Wheeler, the company’s co-founder and chief product officer. Wheeler is a graphic and industrial designer by training who, immediately prior to Cargo, was a senior industrial designer at Lifetime Brands.
- Stuart Clark, co-founder and current head of software and operations. Clark spent over five years at Birchbox working in roles ranging from logistics to software engineering.
- Eric Aleman, a co-founder and current chief of staff at Cargo. Aleman joined Cargo after college at the University of Michigan, where he studied math and entrepreneurship.
- Matthew Lee, the managing partner of CRCM Ventures, which led the final $5.5 million leg of Cargo’s multi-part seed round.
- Michael Murphy, the founding managing partner of Rosecliff Ventures, which invested in Cargo’s first post-TechStars seed round.
- Cyan Banister, a partner at Founders Fund and prolific angel investor.
Banister’s name has not appeared on prior filings for the company, nor has Founders Fund been previously associated with the company. Typically, a representative of the investing venture firm joins a company’s board when the firm leads a round of funding for the first time.
What The Company Is Building
According to the rider-facing page on Cargo’s website, riders open the Cargo Store website on their phone and either manually enters the Cargo Store ID or scans in the QR code with either their camera app or Snapchat app. Riders select free samples or retail items and pays electronically via credit card, Apple Pay, Android Pay, Venmo, or PayPal. Then, when it’s safe to do so, the driver opens the box and hands the item to the customer.
According to a driver-facing page on the site, drivers earn $1 per order, 25 percent of retail sales, and 100% of tips paid through the service. Cargo also offers a $20 referral bonus for recruiting new drivers. Cargo restocks the store at no cost to the drivers.2
For drivers, an in-car Cargo box is a way to make extra money. For passengers, it’s a way to get convenience items on the go. For Cargo, it’s an opportunity to broker the relationship between emerging brands and what the company refers to as “rideshoppers.”
According to a brand-facing page its website, “The Cargo Store surpassed one million orders since our launch [in 2017].” Cargo stated it has “distributed products on behalf of household, high growth and emerging brands.” The “rideshopper,” the archetypical customer Cargo portrays to potential brand partners, is young, affluent, majority-female, and “44% likely to promote a product,” whatever that means exactly.
The fact that a company with some Birchbox lineage is helping brands offer free promotional samples (as well as paid items) is not surprising. It’s one of the ways Birchbox made its money.
Progress To Date
Since launching in June 2017, the company has onboard more than 7,000 drivers spread across at least nine different markets, including its home turf in NYC, as well as Boston, Atlanta, Washington, D.C., Minneapolis, St. Paul, Baltimore, Dallas, and Fort Worth, Texas.
In July 2018, the company announced an in-car commerce partnership with Uber. This coincided with Cargo’s planned expansion into California markets. According to the announcement, “drivers will be able to register with Cargo and pick up a box at select driver onboarding and support centers, known as Greenlight Hubs, in San Francisco and Los Angeles.”
The July announcement said that the company targets eventual global expansion and expects to “reach” 25 million U.S. passengers in 2018.
Illustration: Li-Anne Dias
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