Flexport Inc.’s latest investment round gives the digital freight forwarder an eye-popping valuation of more than $8 billion and a link with Shopify Inc. that opens it up to the thousands of businesses with shops running on the commerce company’s platform.
The latest round brings Flexport’s total raised to date to $2.2 billion and comes off a big year for the company, which has ballooned to 18 offices and a workforce of more than 2,800 offering a software platform to provide visibility in tracking the various aspects of getting product to its final destination. That includes everything from cargo quotes and customs clearance, to shipment tracking and carbon emissions management.
The business, which CEO Ryan Petersen started in 2013, generated $3.3 billion in revenue last year and also told Forbes it turned a profit for the first time in 2021.
“This investment signals that the market recognizes the need for a tech-enabled logistics ecosystem that has the visibility and resilience to handle unexpected challenges of any scale,” Petersen said in a statement.
The company, through a spokesperson, said Petersen was unavailable Monday to discuss in further detail how this latest capital is to be deployed.
A Flexport announcement on the Series E briefly outlined a few examples of where the money would go, including technology development, market expansion and investments and partnerships in new companies.
The spokesperson was unable to elaborate on market expansion and timing, and said on the investment end future activity will tackle not only “current challenges, but those down the road” as it relates to global trade.
Flexport’s past investments have included Fleetzero and Inspectorio. In November it announced its accelerator program with small business lender On Deck. The logistics accelerator, called ODX Flexport, plans to pump money into 60 to 80 startups over a two-year period, with $125,000 investments in exchange for a 7 percent stake.
Flexport’s attracted buzz as a next-generation alternative to the emails, calls, Excel spreadsheets, PDFs and sometimes even faxes still used within the freight industry. The more recent port congestion, labor shortage and surging fees have brought the complexity of the logistics industry and broader supply chain to the forefront, making it top of mind to everyone from corporate CEOs to the average consumer and prompting a push for modernization.
Flexport is a logistics unicorn, but it’s not the only one as investors flock for a piece of the nearly $8.6 trillion global industry, as estimated by research firm Statista in 2020. Supply chain software provider Project44 raised $420 million last month, bringing its valuation to $2.2 billion. Flock Freight, which uses technology to offer shared truckload services, saw its valuation surpass $1 billion when it said in October it closed on a $215 million Series D. Meanwhile, e-commerce fulfillment platform ShipBob Inc.’s valuation also went over the $1 billion mark when it pulled in a $200 million Series E.
The addition of Shopify as a Flexport investor is an interesting one, given the potential synergies between the two software companies with Flexport offering a logistics option for Shopify merchants.
“We’re excited to welcome Shopify as an investor,” Flexport’s spokesperson said. “We already support many of the merchants in their ecosystem of 5,000-plus enterprise and 1 million-plus SMB [small- and medium-sized businesses] sellers.”
A spokesperson for Shopify did not respond to a request for comment Monday on the company’s investment. The investment gives Shopify and MSD board observer representation, while Andreessen Horowitz Growth Operating Partner Bob Swan will take a board seat at Flexport. SoftBank Vision Fund 1, DST Global, Founders Fund and Kevin Kwok among others also invested.
“At Shopify, we see first-hand the challenges million of entrepreneurs face when running their businesses, with logistics being one of the most dauting complexities in commerce today,” Shopify director of product acceleration Bram Sugarman said in a statement.
Sugarman went on to say Flexport’s technology aims to “modernize the supply chain, breaking down barriers to trade for businesses everywhere.”
The investment follows Shopify’s confirmation late last month it intends to retool its Shopify Fulfillment Network in a move a spokesperson, at the time, said would make the businesses on its platform more competitive with big-box retailers. The company had been paring back on third-party logistics contracts, but said fulfillment capacity remained unchanged.
Shopify is expected to offer more details on those changes when it reports its fourth-quarter results next week.