Convoy closes $185M Series C to reach unicorn valuation

Convoy’s founders: CTO Grant Goodale and CEO Dan Lewis. ( Photo: Convoy )

The growth equity investment fund of Google parent company Alphabet, CapitalG, led this round of Convoy’s capital raise, bringing the digital brokerage’s total funding raised so far to more than $265M and a valuation exceeding $1B. As part of the deal, David Lawee from CapitalG will join Convoy’s board of directors. 

Silicon Valley money has been keen on Convoy for a long time, but what interested us most about the deal was the participation of traditional investment and asset management firms, notably T. Rowe Price Associates and Lone Pine Capital. Previous investors in Convoy Greylock Partners and Y Combinator also participated in the round. 

FreightWaves spoke to Andrew Davis, VP and Equity Investment Analyst at T. Rowe Price about the deal. We were particularly interested in how T. Rowe Price’s thesis on Convoy had evolved over time.

“This is a deal that was organic,” said Davis. “I met [Convoy CEO] Dan Lewis 18 months ago, prior to the last round, but historically we’re not a VC firm. What we’re typically doing is investing in companies that have potential to become really really large over time: they’re solving big problems and they’re companies that can become multibillion dollar companies over time, with the possibility of going public. We discussed things last year, but at that stage it didn’t make sense for us to step in, it was a little early.”

“Our view is they’ve made a dramatic amount of progress in terms of the business model and proof points,” said Davis. “I’ve seen their ability to take data and create analytics around it at a pace and confidence interval that I think is unique.”

Davis said in this round, Convoy did not go out looking for the most money at the highest valuation, but was looking for people who had the right combination of capital, partnership, and guidance. T. Rowe Price is already a major investor in publicly-traded transportation companies like C.H. Robinson and Old Dominion.

“They were interviewing us as much as we were interviewing them,” said Davis. Still, he continued, Convoy brought a rich tech valuation rather than a logistics company valuation. Davis said that there will always be demand in the marketplace for equity in a fast-growing company with a great management team trying to solve a big problem, “especially in a slow growth world like we’re in now.”

“To be very candid, freight matching is a math problem, and math problems, especially in a network, are all solved by Metcalfe’s law, and in this context, we feel that Convoy has the strategy and the ability to execute because they’re looking at the problem in a different way,” Davis explained. 

But what makes Convoy truly different, and why is a company commonly referred to as a digital brokerage calling itself a “tech-enabled trucking network” in its new press release?

“Convoy built a system to solve the ultimate problem—how to eliminate waste from supply chains. They’re not just trying to capture arbitrage like a traditional broker. If you create liquidity and drive down waste, freight will naturally find you,” Davis said. Davis cited Dan Lewis’ experience at Amazon, and the fact that many of his senior team came from other West Coast tech companies. Initially, Davis said, that could have been a headwind for a logistics company, but he now feels that Convoy’s tech-first approach has been proven out.

“Eighteen months ago I wasn’t quite sure they were going to get there. At the pace Convoy’s progressing now, they have the chance to be a very large—I don’t want to use the word broker—a very large marketplace company,” Davis pointed out. Convoy’s margins have improved as its lanes matured and reached density, and the company has been able to show how quickly it can bring new products to its shipper customers and carrier partners, learning from its own data at a pace that makes it feel more like a Silicon Valley tech company than a Chicago-based brokerage.

“In five years, Convoy will be demonstrably bigger. Their ability to scale from where they are right now is really exceptional,” Davis concluded.

Correction: a previous version of this article stated that Convoy ‘was now bigger than Echo Global Logistics’. That statement was misleading because while Convoy’s valuation is now roughly equivalent to Echo’s market cap, Echo’s market share and overall revenues exceed Convoy’s.


John Paul Hampstead

John Paul conducts research on multimodal freight markets and holds a Ph.D. in English literature from the University of Michigan. Prior to building a research team at FreightWaves, JP spent two years on the editorial side covering trucking markets, freight brokerage, and M&A.