Frayt, a last-mile on-demand delivery and logistics platform, has closed $7 million in Series A funding, led by Refinery Ventures with participation from Capital Midwest, Venture 53 and the JobsOhio Growth Capital Fund.
The company, which has a network of more than 12,000 drivers across 50 U.S. markets and more than 300 customers, will use the financing to drive product innovation, support rapid market expansion and grow its leadership team.
“Last-mile delivery is extremely challenging and a major pain point in every supply chain,” said Luke Denny, co-founder and CEO of Frayt. “We are thrilled to announce the successful completion of our Series A round of funding, which will allow us to further invest in our last mile product’s capabilities and enhance the customer experience.”
The Frayt on-demand SaaS delivery platform is designed to enable companies to offer scheduled or same-day delivery from their desktop, mobile devices or API integration.
The platform is built to connect shippers with professional drivers in “minutes,” the company says. Drivers on the Frayt platform are independent contractors, and required to pass a background test and must have an insured vehicle. Frayt vehicles include standard-sized sedans, midsize SUVs, cargo vans, and box trucks depending on the dimensions and weight of the buyer’s items.
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Users can provide Frayt with their locations and dimensions to get a price quote before posting their delivery request. Once a request is posted to the marketplace, and a driver accepts the dispatch, the delivery is tracked in real time from pick up to drop off for complete visibility from start to finish. During the delivery, users can access live updates, and have the option to share alerts and confirmation with your customers.
Headquartered in Cincinnati, Ohio, Frayt works with Fortune 500 customers including supply chain tire manufacturer Bridgestone, paint and coating retailer Sherwin-Williams, tile seller The Tile Shop and food conglomerate Cargill.
In a statement, Tim Schigel, managing partner of Refinery Ventures, said that the last-mile delivery industry hasn’t kept up with consumer expectations, “which became more apparent during the pandemic.” He noted that Frayt’s technology “empowers companies to extend their delivery services, ensuring every item is delivered quickly and efficiently while saving time and money. I look forward to working with Luke and his team to help scale and grow the company in 2023 and beyond.”
The funding comes as last-mile delivery continues to scale, growing into a $27.1 billion market in 2022, according to a report by P&S Intelligence. The sector is expected to further expand at a compound annual growth rate (CAGR) of 20.6 percent through 2030 to $121.2 billion.
In 2022, North America generated approximately $9 billion in last-mile revenue due to higher acceptance level of technologies in the market and the improving effectiveness of last-mile delivery players in the space, the report said.
The emergence of more last-mile players aligns with the escalating costs of the last mile and the increasing demand for free shipping and faster delivery. Last-mile delivery is estimated to represent 41 percent of total supply chain costs, making it the biggest cost driver in the supply chain, according to a report from Capgemini. Last-mile delivery outpaces the remaining costs handily, with 20 percent of supply chain expenses dedicated to sorting and 16 percent going to parceling. Warehousing and the other remaining supply chain costs make up 25 percent of total expenses.
Frayt’s funding also comes at a time when consumers are becoming more critical of delivery capabilities, and are willing to jump ship from a brand if things go awry. Eighty-five percent of consumers report that they will not shop with a retailer again after having a poor delivery experience, according to a consumer survey from another last-mile delivery platform, FarEye.
As new upstarts enter the fold, the delivery landscape continues to feel fragmented, particularly as companies like Frayt keep a laser focus on the last mile. Wing CEO Adam Woodworth said during a panel at Shoptalk that “everybody’s trying to solve one piece” of the delivery equation instead of addressing wider concerns. But it’s apparent that there are still investors out there looking to fund last-mile delivery projects. Rounds having been invested in other companies in recent months including Better Trucks and Shein’s delivery partner UniUni, both of which secured $15 million each, as well as OneRail, which raised $33 million in Series B funding last November.
“Our investors share our vision for the future of last mile logistics solutions and recognize the tremendous potential of our technology and platform,” Frayt’s Denny said. “We are grateful for their support and confidence, and we are more determined than ever to deliver on our promise of superior last mile logistics services that exceed customer expectations. With this infusion of capital, we will continue to innovate and optimize our products, delivering unparalleled speed, efficiency and reliability to our partners and customers.”