Here’s a wild stat: Between 20% and 30% of all invoices today contain some form of exception or error. That means two or three out of every 10 transactions are creating headaches for shippers — even for the most tech-savvy companies.
“Our hypothesis was that if this is a problem for Uber, one of the best technology companies in the world, we’re pretty sure it’s going to be a problem for Ace Hardware or, you know, Joe’s Trucking out of Ohio,” said Matt McKinney, co-founder and CEO of Loop, which this week emerged from stealth.
McKinney and co-founder Shaosu Liu were two of the architects behind Uber Freight. Shortly after leaving the company, they founded Loop to address the logistics payment problems they witnessed firsthand. But they’re taking a fundamentally different approach.
“If you want to be a payment system like Visa or MasterCard, you’ve got to be the source of truth. And the reason why we can be the source of truth … is that we are Switzerland,” McKinney explained.
“All we’re doing is billing and payment. We’re not trying to match shippers and carriers. There’s no conflict with us as a third party.”
Loop on Thursday announced that it raised a total of $30 million, about $6 million through seed funding and the rest through a Series A round led by Founders Fund. Neither raise was previously announced.
Other participants in the Series A, which closed earlier this year, included Susa, 8VC Capital and Flexport. In addition, the firm is backed by Maersk, Lineage Logistics and Uber co-founder Garrett Camp.
The San Francisco-based company plans to use the funding to scale up its business, which handled over $1 billion in payment volume in its first year.
“We’re working with large enterprises, and we’re processing a significant amount of payment,” McKinney said.
Loop’s goal is to prevent exceptions and errors rather than react to them. To do that, it organizes users’ data via application programming interface integrations with several third-party providers, regardless of document type.
Then, the company takes that data and automatically matches shipping invoices to pricing agreements, which allows for quick audits and precision cash flow tracking. According to the 35 shippers McKinney spoke with before founding the company, that’s the aspirin for their shipping headaches.
“They all said the same thing verbatim: ‘It’s hard for me to know what to pay, and it’s hard for me to know what I should be getting paid.’”
Loop uses AI and machine learning to digitize contracts and other transactional documents like bills of lading and inspection tickets. Built in-house, the AI doesn’t use optical character recognition. Rather, it leverages a combination of natural language processing and computer vision, which allows the system to adapt to any template.
McKinney credited that feat to Loop’s engineering team: “We have the best engineering team of any startup in the world right now. And I’m very fortunate, because I don’t think if I were to apply for a job with Loop today, I’d be able to get hired,” he said.
“And that’s kind of how I want it.”
In addition to scaling the business, McKinney plans to use the fresh funding to grow Loop’s engineering team and attract top talent in other areas. That, he believes, is key to making the company stand out among the sea of digital payments firms taking over the FreightTech space.
“About 20% of all invoices today have an exception or an error. With Loop, we’re taking that down to zero.”
Updated to correct the spelling of Shaosu Liu.