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Two months after taking on a huge $125 million Series A round that put the company in the unicorn club, the package delivery company Veho is back with another huge round, this time a $170 million Series B round.
This time, Tiger Global led the round, and SoftBank Vision Fund 2 also took part. With this round, the company has raised a total of $300 million in funding over the past two years and is now worth $1.5 billion.
General Catalyst, Bling Capital, Construct Capital, Industry Ventures, and Origin Ventures, which were already investors, joined the round. The Chainsmokers’ Mantis VC Fund and the founders and CEOs of Allbirds, Everlane, FIGS, Harry’s, Flexport, and Warby Parker are among the other well-known investors in the company.
Even though two months haven’t been that long, let’s catch you up on Veho. The logistics technology company is focusing on the last mile of delivery, which is how packages get from fulfilment centres to the customer’s door. Already worth more than $100 billion, the global last-mile delivery market is expected to reach $146.96 billion by 2025.
Veho is not the only one trying to figure out what’s wrong. Last year, we heard about new rounds from companies like Zoomo, Cargamos, Coco, Deliverr, and Bringg. But Veho stands out from the rest because it lets customers choose when, where, and how they want their packages delivered. It also has a doorstop returns programme so that people can easily send back things they don’t want, and it keeps customers updated in real-time throughout the whole process.
Since the company was able to get HelloFresh, Misfits Market, and thredUP as customers and that much funding in a short amount of time, there is no doubt that this strategy is working.
Lydia Jett, the managing partner at SoftBank Investment Advisers, said in a written statement, “As e-commerce sales continue to rise, last-mile delivery capacity has not kept up, and logistics companies have not made the technological investments needed to provide the level of customer service that a new generation of consumers expects.” “We think that Veho has built a leading position in this market with an integrated technology platform that allows for flexible and reliable delivery services. This drives conversions and customer loyalty.” We’re excited to work with Itamar Zur and his team to help them on their mission to change the way delivery works.
Zur, co-founder and CEO of Veho, told TechCrunch that the Series A round brought the company to the attention of some e-commerce companies, some of which are already in talks. And after people didn’t get their orders in time for the holidays, the company realised it was in a good position to join an industry that was changing quickly. Even though it had just taken the Series A round of funding six weeks before, Zur took the chance to work with top venture capital firms like Tiger and SoftBank.
In January, the company’s sales went up by 40% and the number of customers grew by another 20%. By getting more money, the company can invest in parts of the business sooner than it had planned. Among these are making big investments in technology and infrastructure, like automating warehouses.
As Veho plans a huge tech play, the company also wants to go from having 500 employees now to having 2,000 by the end of the year. This will be done by hiring people for all positions, but especially software engineers. With the extra money, the company will be able to hire more people, give its employees better benefits, and look for possible strategic acquisitions.
Veho just opened its 15th location in Orlando, and Zur is planning to open eight more by the end of the first quarter.
“The new round has made all of these things happen faster,” he said. “Even though we’re growing quickly, we still have a 99.9% on-time delivery rate. For e-commerce companies, what used to set them apart was the cost of production or a nice website. Now, logistics is at the forefront of innovation and is the new thing that sets them apart.
Benjamin Gorman and John Lin, who run F-Prime Capital, were not too surprised when Veho got another big round of funding. They have put money into similar companies, like Logixboard, in the past.
Their company is not an investor in Veho, but Gorman said that the logistics ecosystem is so big — he thinks the U.S. trucking market alone is worth $700 billion — that a company doesn’t need much market share to have a big business. He uses Flexport’s recent Series E round, which raised $935 million, as an example.
Many logistics companies are part of the fintech universe, where Lin said his firm’s research showed the median valuation jumped two times in one year as the average round size went from $50 million to $80 million.
Gorman thinks that the fast growth of the industry between 2019 and 2020, which was partly caused by the global pandemic making people buy things online, isn’t likely to happen again, but it also won’t go back to the way things were done before.
“Logistics is driven by long-term trends, such as the use of technology that has been around for a while,” Gorman said. “E-commerce is growing, and new brands and a shift towards vertical penetration will continue to drive that growth. There will also be new ways of getting messages across to customers. Like with food and clothing, the brand message will include information about how something is made and moves through the supply chain and logistics in an environmentally friendly way.
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