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FourKites releases details of latest raise

Expert weighs in on FreightTech investment

The sun begins setting on FreightTech valuations. (Photo: Jim Allen/FreightWaves)

After a recent round of layoffs, supply chain visibility platform FourKites has disclosed its latest funding round details.

According to a filing Thursday with the U.S. Securities and Exchange Commission, the Chicago-based company in late June raised $30 million from undisclosed investors in exchange for equity, and it hopes to close the funding round with another $50 million. 

In a statement to TechCrunch, CEO Mathew Elenjickal confirmed that one of the strategic investors was FedEx. 

When FourKites announced its FedEx partnership in June and, at the time, an undisclosed investment from a global shipper, Elenjickal went on record with The Wall Street Journal, saying the company had reached a valuation “at more than $1 billion.”

According to the SEC filing, FourKites also issued warrants for 907,068 shares with a small price of 1 cent each, valued just about $9 million.

The deal solidifies FedEx as a FourKites customer, and according to the partnership release, gives FourKites FedEx’s data insights of more than 16.5 million shipments across 220 countries and territories daily to strengthen its current solutions offerings.

“FedEx is not just making an investment. They are also rightly identifying tracking and visibility as vital areas in the supply chain. By negotiating warrants, they are trying to capture the value they add to a tech company like FourKites, because their partnership should contribute to FourKites’ growth,” said Benjamin Gordon, managing partner and CEO of Cambridge Capital.

“Interestingly, this structure is similar to the model Amazon has used when they invest in and work more closely with partners, as they have done with Atlas Worldwide and Air Transport Services Group,” Gordon said.

FourKites did respond to FreightWaves’ request for comment on the filing, but due to strict confidentiality obligations, would not confirm the investor was FedEx or what the new capital would be applied to. FourKites also said stated the investment included a separate commercial contract that is not yet public at this time.

FreightTech investment environment

This deal comes at a time where the current investment environment for FreightTech has begun to take a turn.

In Q2 2022, late-stage deal volume fell 17% quarter over quarter, with projections to fall 29% year over year by the end of 2022, according to a recent technology valuations report by CB Insights.

For Series D rounds specifically, the average deal size fell 13% and valuations fell 23% from Q1 2022.

These falling technology valuations are the fuel behind many FreightTech company layoffs, as seen from providers like FarEye, project44, Stord and Convoy.

Earlier this month, FourKites went through its own round of layoffs due to “current market conditions and ongoing economic uncertainty,” according to Elenjickal.

“We had to make some very difficult decisions to ensure the long-term profitability and sustainable growth of our business,” he explained.

FreightTech’s objectives during these conditions are lean operations, holding on to as much cash as possible and weathering the storm until rates and volumes mirror the markets of years past. 

Tender volume levels flatten out over the past week: SONAR: OTVI.USA: 22 (white),  2021 (green) and 2020 (blue)
To learn more about FreightWaves SONAR, click here.

If a FreightTech company is in need of new capital during these times, according to Gordon, a strategic investment from a customer partner may bring more value than just capital.

“Going forward, I believe smart supply chain companies will continue to look for opportunities to invest in dynamic technology companies and to create structures that reflect alignment for shared value creation,” he said.

Watch now: What was the goal for FourKites when expanding visibility?

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Grace Sharkey

Grace is an entrepreneur and former supply chain executive who has held positions in sales, operations, and consulting. She is passionate about the future of the industry and how technology can improve the experience for all supply chain members. She believes supply chain is the one industry that affects every human directly, and is looking forward to creating content that mirrors that sentiment. If you have a story to share, please contact me at [email protected]