Emerge Raises $ 130 Million Series B to Grow Digital Freight Market
Digital Freight Marketplace based in Scottsdale, Arizona Emerge announced Thursday morning that it has closed a $ 130 million Series B funding round led by 9Yards Capital, Tiger Global Management and The Spruce House Partnership. Existing investors New Road Capital Partners and Greycroft also participated in the round.
âWe have been fortunate to have experienced explosive growth over the past few years, and this funding will go a long way to supporting the future success of Emerge,â said Founder and Co-CEO Michael Leto. âIt’s no small task and will require a lot of collaboration, but our ultimate goal is to make the industry work better for everyone involved. We look forward to continuously evolving our cloud-based procurement software to create the most sophisticated freight solution in the country. “
Emerge’s latest fundraising round brings the company’s fundraising total to over $ 150 million. The new valuation was not disclosed, but in an interview with FreightWaves, company officials said 2021 gross revenue would be around $ 200 million. The company plans to move around $ 4 billion in freight through its system this year and wants to grow to $ 15 billion next year.
âLogistics is the hottest industry in the world right now, and we have one of the biggest opportunities in this industry ahead of us,â said Emerge’s other founder and co-CEO, Andrew Leto. .
The deal is a watershed moment, signaling the gradual maturation of the FreightTech space: sophisticated global asset managers writing big checks to seasoned entrepreneurs in a year when the supply chain has taken center stage. the scene.
Founders, co-CEOs and brothers Michael and Andrew Leto are serial entrepreneurs in the transportation industry, having previously founded freight brokerage firm GlobalTranz in 2003 and visibility provider 10-4 Systems in 2012. According to Pitchbook , GlobalTranz was valued at $ 1.55 billion at the time of its merger. with Worldwide Express in June. 10-4 Systems was acquired by Trimble in 2017.
Meanwhile, Tiger Global rose to fame in its own right this year, gaining media attention for closing deals at a breakneck pace of nearly one every other day in the first quarter. Tiger’s relatively small team of about a dozen investors have $ 75 billion in assets under management and appear to have opted for a strategy of partnering with co-investors to speed up their trading process. Tiger has earned a reputation for running quickly and paying high prices for fairness without asking for a seat on the board.
The Letos said the new capital will be used to evolve Emerge’s digital freight market, which is built around a radical re-imagining of transportation sourcing and RFP management.
Emerge assumes that the way shippers manage tendering processes with just a few dozen carriers and brokers introduces deep inefficiencies in freight markets. A shipper looking for outbound Chicago capacity has no way of knowing, for example, that a second shipper is sending Carrier X’s trucks to Chicago and Carrier X should be included in their offer. During this time, the carrier has no way of accessing the freight from the first shipper – they probably never see the shipper’s DP or available lanes. The result is that shippers have no way of knowing which carriers are best suited to carry their freight, and carriers have no way of easily bidding on the best freight for their networks.
âIf you are a shipper, 99% of carriers in the United States do not have access to your freight,â said Andrew Leto. “That’s why so much freight is going to the loading panels, and that’s why there are 300,000 people in Chicago doing truck brokerage, because of this problem.”
Since even large shippers manage their freight buying processes through spreadsheets and emails, their transportation departments can’t just choose to include 1,000 carriers and brokers in one offer instead of the 20. or usual 30. months – long enough for the prices of the offers to become stale. Even the most sophisticated shippers use procurement platforms like Coupa or Jaggaer to execute their offers, generic tools designed for products like office supplies, not a specially designed transportation procurement system.
The Emerge platform brings together shipper volumes and transport capacity and offers shippers, brokers and carriers visibility into their respective networks. Sender A can see that Sender B is sending Carrier X to Chicago, and Carrier X should, in theory, be an inexpensive outbound option. Meanwhile, Carrier X can balance its entire network within the Emerge platform by quickly bidding on freight from hundreds of corporate shippers. Feedback and communication tools on the platform help shippers and transportation providers negotiate in one go, avoiding multiple bidding processes.
Shippers use Emerge for free, while brokers and carriers pay Emerge to access shippers’ freight. One way to look at the Emerge platform is that it is a technology layer that disintermediates 4PLs and managed transport solutions by giving back power over purchasing decisions to shippers, while providing the same optimization opportunities on several shipper networks.
This means that Emerge’s platform benefits from powerful network effects, with each newly integrated shipper or transport provider creating additional value for existing users.
âIf every shipper were tendered the same, the full truckload market in the United States would be 10 to 15% more efficient,â said Andrew Leto.
Although shippers use the platform for free, the change management coupled with a complete overhaul of transportation procurement means that Emerge needs talented corporate sellers to demonstrate the value of the new approach. A corporate sales team of just three people got Emerge its first 300 senders, but Andrew Leto has said he wants to grow the team to 25 by 2022 and 40 by the end of this year. .
The new capital will also allow Emerge to triple its R&D spending, said Andrew Leto, and create new ways of managing information in the platform that will improve market efficiency.
A priority on Emerge’s product roadmap is the carrier dashboard. Leto explained that in the traditional tendering process, a road carrier seeking freight from a new customer will often have to “buy” the freight or agree to carry subscale volumes at an uneconomic rate. , until his service record can be established. But a carrier that has a proven track record of trucking freight for corporate shippers at a 95% on-time rate shouldn’t have to prove itself time and time again with every new customer acquisition. The Emerge Carrier Scorecard will allow carriers to bring their past performance with them to an offer and, for shippers, reduce the risk associated with the process of adding new carriers to their routing guides.
Emerge will also look to integrate freight brokerage agents into its platform, believing its procurement system to be one of the most valuable technologies an agent can bring to a shipper.
FreightWaves President George Abernathy sits on the Emerge Board of Directors.