Flexport Start-up Freight Reaches $ 3.2 Billion After Softbank's $ 1 Billion Investment

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Its start-up operates 747 aircraft and employs 1,066 people in 11 offices and four warehouses around the world. He is attacking a market he calls "as old as humanity", with billions of dollars at stake. So when Flexport CEO Ryan Petersen decided to raise considerable funds to pay more fuel for the growth of its fast-growing cargo carrier start-up, it was not surprising to turn to Silicon Valley's currently well-known fund for writing huge and bold checks: SoftBank.

Flexport, a freight forwarder who helps companies transport their goods to their point of sale, announced Thursday a $ 1 billion fundraising drive by the SoftBank Vision Fund, with existing investors Founders Fund, DST Global, Cherubic Ventures, Susa Ventures and SF Express. participant. Investment, a top-notch transaction (meaning that early investors did not sell their shares), values ​​the commissioning of a San Francisco-based freight forwarder at $ 3.2 billion, according to a knowledgeable source.

As part of the capital injection, Vision Fund Managing Partner Michael Ronen will join Flexport's Board of Directors and Director Ed Shrager will present as an observer. Petersen – who retains majority control of the company – will also appoint an independent board member to join Trae Stephens of Founders Fund.

This investment comes as Flexport continues to develop its business at a rapid pace, atypical for startups at its scale. Although the company previously announced its revenue for 2017 – audited at $ 224.8 million, Petersen – stated that Flexport's revenue amounted to $ 471 million for 2018, a previously unreported total that accounts for a growth of 110%.

SoftBank's big Flexport bet was crowned by a two-year relationship that got warmer after Petersen read SoftBank's founder, Masayoshi Son Plan over 300 years unveiled in 2017. The two founders shared the ambition to use technology to connect people through an "information revolution," Petersen said. And both speak in radical time horizons that may seem prophetic – or hubristic – depending on who listens to them. "The audacity of having a 300 year vision, it just sounded to me," says Petersen. "One of our core values ​​is to play long games. We are an old industry. World trade is as old as humanity. All major industries are trade-based – and civilizations break up when they start looting. We want to advance trade for the next hundred years. "

Choosing SoftBank as the lead investor is not without controversy. A significant portion of Vision Fund's approximately $ 100 billion capital comes from Saudi Arabia, which has been under scrutiny since the murder of journalist Jamal Khashoggi in October 2018. His son recently said it was "too early" to decide whether SoftBank would work with Saudi Arabia for its next fund. When asked if such a connection had paused him, Peter Petersen replied, "We thought about it a lot," adding that Flexport had spent time with the Vision Fund in the United States and Japan. They decided that they could live with it. "We found that we were aligned with our vision of how technology could create a better, more interconnected world. This investment will give us the scale needed to have the greatest impact possible in the world. "

Today, this scale includes a network of 10,000 import and export experts and customers who spend millions – more than $ 10 million a year – to enable Flexport to manage its supply chains. by means of a set of software, local experts and physical assets such as its warehouses. According to Flexport, freight tracking and processing is a huge activity around the world. Its offices include at least 5,900 freight forwarders based in the United States. Many of them use experts with decades of experience who use e-mail, phone calls and spreadsheets. accomplished job. "Of the top 100 freight forwarders, we are the only one to have been created after Netscape," says Petersen.

The modernization of this process through technology has allowed Flexport to be accepted, and then to participate in Y Combinator, a startup accelerator in 2014. While many startups were following Marc Andreessen's battle call with Silicon Valley from 2011, a software devoured the world, only Petersen wanted mantra to the world's most unusual logistics. It was not totally unexpected. Previously, he had worked on many projects in space, including the business of his brother David, who imported medical bathtubs from China. "He was clearly obsessed with the import-export business," said Alexis Ohanian, YC's former partner, who also invested in the startup through his venture capital firm Initialized Capital.

If a company accepts a trial to manage at least 10 cargoes via Flexport, Petersen thinks it can prove its worth, with Flexport software helping to optimize each route to prioritize speed, reliability, cost, or a combination of all three. That's how Flexport started working with sound system manufacturer Sonos, which tested Flexport early in June 2016 with a track of its activity, its China-Australia route. It is now one of the four major logistic partners used by Sonos worldwide, with two billion, the forwarding and UPS giants. At first, Sonos was skeptical about trusting a start-up, said Patrick Stuut, global operations manager for Sonos. "They have shown their value over time," he says. "My advice is to give them a chance."

But for other customers, Flexport's youth is always visible. Georgia-Pacific, the paper company that accounts for most of the freight handled by parent company Koch Industries, is one of its major export customers. Georgia-Pacific now uses Flexport to ship finished Uruguay products to Latin America, the Middle East and parts of India. In addition, she works with two traditional freight forwarders elsewhere. The start-up still has a long way to go on this scale and over time needs to strengthen its compliance and international law expertise in markets such as European ports, "said Carter Noland, director of Supply from Georgia-Pacific.

Add to that a complete list of additions and improvements to Flexport with its $ 1 billion in new cash. The company plans to recruit more engineers, including a new second technical office in Chicago, as well as to recruit more local experts in its global markets. Flexport will also continue to invest in physical assets such as additional warehouses; it is planned to move from an airplane to a fleet. There are also ancillary companies, such as Flexport Capital, which offers inventory loans to its customers, as well as products it does not yet offer, such as analysis tools to study and forecast forecasts. according to customer delivery habits.

For SoftBank, Flexport is a vital link in a growing network of logistics-focused investments and subsidiaries, ranging from warehouse assets, Uber vehicles, delivery and driverless cars to robots. from Boston Dynamics. Add all this, and it looks a lot like SoftBank that assembles an Amazon rival. Ronen, the investor who led SoftBank's investment, said the thinking was on track. "I remember that I was in New York trying to buy a car and that the dealer had no idea where the car was." Maybe they will receive an email telling him that he has reached the wharf and that he will eventually show up on the ground. And with Amazon, you can order paper towels and see where they are until they arrive in two hours, "says Ronen. "We should be able, outside of the Amazonian ecosystem, to have the goods delivered much more quickly and cheaply."

Along with the growth of Flexport, the company also plans to step up the efforts of its non-profit branch, Flexport.org. This group, which Petersen has not discussed in detail before, offers customers a carbon calculator to measure the impact of their shipments on the environment, as well as the ability to offset their carbon footprint by donating to projects. and non-governmental organizations verified by Flexport. The company also offers its software to non-governmental organizations for free tracking of donated goods, such as bottled water or working gloves for recovery sites. More recently, Flexport.org has been expanded to encourage its own customers to donate merchandise containing more space, by subsidizing or removing shipping costs. & Nbsp; Flexport.org sent 487 freight shipments in 2018, allowing Susy Schöllm, the company's director, to save more than 20% and reduce waste by 3.9 million pounds. "They have the opportunity to be a backbone in these scenarios," says Ashton Kutcher, an actor and investor who supported Flexport and helped him pilot the project in Iowa. "The bigger their network becomes, the more they can be effective."

If that sounds like a lot to a start-up, it's because it is. Thanks to this financing, Flexport is not only facing additional financial pressure – investors will expect growth 5 or 10 times higher than today – but also too fast execution. And that without Flexport becoming a blockchain (Petersen says he's waiting for a shipping standard to be published or not doing it before building it himself) or acquisitions if partners or other startups stumble and were looking to sell.

Cue SoftBank, which has established itself as the natural choice for such a big check and ambitions too disproportionate. & Nbsp; Petersen tells the story of his meeting with Son, that he traveled to the Tokyo Bay area and to Tokyo before the agreement was concluded, and the lesson he learned from the early days of Alibaba , the Chinese technology giant in which he was one of the first investors. His son and founder, Jack Ma, agreed that Alibaba would grow much faster if it did not charge transaction fees for years and if it focused on the scale. The implication for Flexport – which, Petersen notes, charges for freight but offers free software – to focus on building its global network at all costs, was clear. "It was an interesting story to hear first-hand," says Petersen. "Plus, I really enjoyed negotiating a $ 1 billion deal while wearing slippers."

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Its start-up operates 747 aircraft and employs 1,066 people in 11 offices and four warehouses around the world. He is attacking a market he calls "as old as humanity", with billions of dollars at stake. So when Flexport CEO Ryan Petersen decided to raise considerable funds to pay more fuel for the growth of its fast-growing cargo carrier start-up, it was not surprising to turn to Silicon Valley's currently well-known fund for writing huge and bold checks: SoftBank.

Flexport, a freight forwarder who helps companies transport their goods to their point of sale, announced Thursday a $ 1 billion financing run by the SoftBank Vision Fund, with funds from 39 existing investors Founders Fund, Global DST, Cherubic Ventures, Susa Ventures and SF Express. . Investment, a top-notch transaction (meaning that early investors did not sell their shares), values ​​the commissioning of a San Francisco-based freight forwarder at $ 3.2 billion, according to a knowledgeable source.

As part of the capital injection, Vision Fund Managing Partner Michael Ronen will join Flexport's Board of Directors and Director Ed Shrager will present as an observer. Petersen – who retains majority control of the company – will also appoint an independent board member to join Trae Stephens of Founders Fund.

This investment comes as Flexport continues to develop its business at a rapid pace, atypical for startups at its scale. Although the company previously announced its revenue for 2017 – audited at $ 224.8 million, Petersen – stated that Flexport's revenue amounted to $ 471 million for 2018, a previously unreported total that accounts for a growth of 110%.

SoftBank's big Flexport bet was crowned by a two-year relationship that got warmer after Petersen read SoftBank's founder, Masayoshi Son Plan over 300 years unveiled in 2017. The two founders shared the ambition to use technology to connect people through an "information revolution," Petersen said. And both speak in radical time horizons that may seem prophetic – or hubristic – depending on who listens to them. "The audacity of having a 300 year vision, it just sounded to me," says Petersen. "One of our core values ​​is to play long games. We are an old industry. World trade is as old as humanity. All major industries are trade-based – and civilizations break up when they start looting. We want to advance trade for the next hundred years. "

Choosing SoftBank as the lead investor is not without controversy. A significant portion of Vision Fund's approximately $ 100 billion capital comes from Saudi Arabia, which has been under scrutiny since the murder of journalist Jamal Khashoggi in October 2018. His son recently said it was "too early" to decide whether SoftBank would work with Saudi Arabia for its next fund. When asked if such a connection had paused him, Peter Petersen replied, "We thought about it a lot," adding that Flexport had spent time with the Vision Fund in the United States and Japan. They decided that they could live with it. "We found that we were aligned with our vision of how technology could create a better, more interconnected world. This investment will give us the scale needed to have the greatest impact possible in the world. "

Today, this scale includes a network of 10,000 import and export experts and customers who spend millions – more than $ 10 million a year – to enable Flexport to manage its supply chains. by means of a set of software, local experts and physical assets such as its warehouses. According to Flexport, freight tracking and processing is a huge activity around the world. Its offices include at least 5,900 freight forwarders based in the United States. Many of them use experts with decades of experience who use e-mail, phone calls and spreadsheets. accomplished job. "Of the top 100 freight forwarders, we are the only one to have been created after Netscape," says Petersen.

The modernization of this process through technology has allowed Flexport to be accepted, and then to participate in Y Combinator, a startup accelerator in 2014. While many startups were following Marc Andreessen's battle call with Silicon Valley from 2011, a software devoured the world, only Petersen wanted mantra to the world's most unusual logistics. It was not totally unexpected. Previously, he had worked on many projects in space, including the business of his brother David, who imported medical bathtubs from China. "He was clearly obsessed with the import-export business," said Alexis Ohanian, YC's former partner, who also invested in the startup through his venture capital firm Initialized Capital.

If a company accepts a trial to manage at least 10 cargoes via Flexport, Petersen thinks it can prove its worth, with Flexport software helping to optimize each route to prioritize speed, reliability, cost, or a combination of all three. That's how Flexport started working with sound system manufacturer Sonos, which tested Flexport early in June 2016 with a track of its activity, its China-Australia route. It is now one of the four major logistic partners used by Sonos worldwide, with two billion, the forwarding and UPS giants. At first, Sonos was skeptical about trusting a start-up, said Patrick Stuut, global operations manager for Sonos. "They have shown their value over time," he says. "My advice is to give them a chance."

But for other customers, Flexport's youth is always visible. Georgia-Pacific, the paper company that accounts for most of the freight handled by parent company Koch Industries, is one of its major export customers. Georgia-Pacific now uses Flexport to ship finished Uruguay products to Latin America, the Middle East and parts of India. In addition, she works with two traditional freight forwarders elsewhere. The start-up still has a long way to go on this scale and over time needs to strengthen its compliance and international law expertise in markets such as European ports, "said Carter Noland, director of Supply from Georgia-Pacific.

Add to that a complete list of additions and improvements to Flexport with its $ 1 billion in new cash. The company plans to recruit more engineers, including a new second technical office in Chicago, as well as to recruit more local experts in its global markets. Flexport will also continue to invest in physical assets such as additional warehouses; it is planned to move from an airplane to a fleet. There are also ancillary companies, such as Flexport Capital, which offers inventory loans to its customers, as well as products it does not yet offer, such as analysis tools to study and forecast forecasts. according to customer delivery habits.

For SoftBank, Flexport is a vital link in a growing network of logistics-focused investments and subsidiaries, ranging from warehouse assets, Uber vehicles, delivery and driverless cars to robots. from Boston Dynamics. Add all this, and it looks a lot like SoftBank that assembles an Amazon rival. Ronen, the investor who led SoftBank's investment, said the thinking was on track. "I remember that I was in New York trying to buy a car and that the dealer had no idea where the car was." Maybe they will receive an email telling him that he has reached the wharf and that he will eventually show up on the ground. And with Amazon, you can order paper towels and see where they are until they arrive in two hours, "says Ronen. "We should be able, outside of the Amazonian ecosystem, to have the goods delivered much more quickly and cheaply."

Along with the growth of Flexport, the company also plans to step up the efforts of its non-profit branch, Flexport.org. This group, which Petersen has not discussed in detail before, offers customers a carbon calculator to measure the impact of their shipments on the environment, as well as the ability to offset their carbon footprint by donating to projects. and non-governmental organizations verified by Flexport. The company also offers its software to non-governmental organizations for free tracking of donated goods, such as bottled water or working gloves for recovery sites. More recently, Flexport.org has expanded to encourage its own customers to donate goods in shipments containing more space, subsidizing or removing shipping costs. Flexport.org sent 487 cargo shipments in 2018, saving on average more than 20% savings for non-profit organizations and reducing waste by 3.9 million pounds, according to director Susy Schöneberg. "They have the opportunity to be a backbone in these scenarios," says Ashton Kutcher, an actor and investor who supported Flexport and helped him pilot the project in Iowa. "The bigger their network becomes, the more they can be effective."

If that sounds like a lot to a start-up, it's because it is. Thanks to this financing, Flexport is not only facing additional financial pressure – investors will expect growth 5 or 10 times higher than today – but also too fast execution. And that without Flexport becoming a blockchain (Petersen says he's waiting for a shipping standard to be published or not doing it before building it himself) or acquisitions if partners or other startups stumble and were looking to sell.

Cue SoftBank, which has emerged as the natural choice for a check of this size and huge ambitions. Petersen tells the story of his meeting with Son, that he traveled to the Tokyo Bay area and to Tokyo before the agreement was concluded, and the lesson he learned from the early days of Alibaba , the Chinese technology giant in which he was one of the first investors. His son and founder, Jack Ma, agreed that Alibaba would grow much faster if it did not charge transaction fees for years and if it focused on the scale. The implication for Flexport – which, Petersen notes, charges for freight but offers free software – to focus on building its global network at all costs, was clear. "It was an interesting story to hear first-hand," says Petersen. "Plus, I really enjoyed negotiating a $ 1 billion deal while wearing slippers."