VCs Have A Bad Relationship With Trucks

Among country singers, crooning about trucks has long been a reliable path to getting a hit. The list of famed songs praising old pickups is probably rivaled in length only by odes to whiskey and broken hearts.

If only startup investors could do the same. But sadly, when it comes to trucks, venture capitalists are basically the opposite of country singers. Almost anytime they start dabbling with pickups and long-haul tractor-trailers, the result seems to be anything but a hit.

The list of failures at the intersection of trucks, trucking and startups is not a short one. Nor is it a cheap one. Failed companies raised billions before breaking down.

A breakdown of breakdowns

One of the largest losses came this month as Seattle-based trucking logistics startup Convoy announced it is shutting down, citing a “massive freight recession.” Previously, the 8-year-old company had raised more than $800 million in venture funding.

Several venture-backed companies that went public have also had to wind down or file for bankruptcy, including:

Embark Trucks, a startup working on autonomous trucking technology that went public via SPAC in 2021 after raising over $115 million in venture funding. The San Francisco-based company landed an initial public valuation of more than $5 billion, but subsequently things quickly went south. The company announced earlier this year it is winding down operations.
Sono Motors, a German developer of solar technology for refrigerated trucks, buses, RVs and other vehicles, filed for insolvency (Germany’s term for bankruptcy) earlier this year. Sono, which went public in 2021, was originally known for its electric car program, but later pivoted to supplying solar tech to other companies.
Lordstown Motors, a Michigan-based electric-truck maker, filed for bankruptcy in June and was delisted from Nasdaq shortly afterward. The company went public in late 2020 and at its peak was valued around $5 billion.

Public market of broken dreams

A song titled “Truck Yeah” that once topped the country charts obviously wasn’t written with truck-focused startup investors in mind. Their anthem, at least in the rear view mirror, should probably be “Truck No.”

Returns speak for themselves. The list of publicly traded, VC-funded companies tied to trucking that have seen sharp stock declines includes virtually everyone in the space that went public in the past few years. Using Crunchbase data, we put together a list of 10 that fit this description and compare their initial public valuations to where they are now.

Overall, it’s a lot of steep drops. When the 10 companies above first hit the market, they were collectively valued at $125 billion. Today, the combined market cap of the same group is around $28 billion — representing a 78% decline.

Hot theme + trucks = not a hit

One of the takeaways here is that when you combine trucks with one of the hot startup investment themes of the moment — such as autonomous driving or logistics platforms — results are often not good.

(For what it’s worth, the inverse seems to be true of country music. When you combine trucks with another popular theme, such as a broken heart, you get a hit like That Ain’t My Truck, about a guy whose girlfriend ditched him for another truck owner.)

Of course, disrupting the trucking space is a lot harder than penning some lyrics about an old Chevy, a task that even ChatGPT can do tolerably well. Even Tesla, the most valuable U.S. automaker, is stumbling in its attempts to roll out its electric Cybertruck, with Elon Musk lamenting last week that the company “dug its own grave” by taking on a model with tremendous production challenges.

Truck luck

Reading country lyrics, it’s also immediately obvious how many songwriters have discovered that “truck” rhymes with “luck.”

In the case of startup investors, many are hoping for better fortune this time around with recent truck-related investments. While funding has slowed considerably from the 2021 peak, we are still seeing rounds get done. Larger ones include a $35 million June Series B for Madrid-based freight startup Trucksters and a $34 million Series C this week for South Asia-focused logistics platform Inteluck.

Looking back at IPO returns however, it’s also clear that if venture investors wrote songs about truck-related exits, they’d have to preface “luck” with “out of.”