Las Olas Venture Capital (LOVC) announced that it has made an investment in freight logistics startup SmartHop, though the actual value of the deal remains undisclosed. SmartHop helps automate route planning and provides real-time dispatch advice for truckers, while also assisting shippers in sourcing capacity for their loads.
In the trucking industry, over $40 billion is lost annually by fleet operators running trucks with vacant capacity in them. Filling up that empty space has been tricky, as it involves relaying information to shippers and getting them to load freight--all in real-time. SmartHop is looking to bridge the divide by using machine learning algorithms to modernize the traditional dispatching model.
As the industry struggles with the driver availability crunch, it is crucial to optimize and fill up available freight space capacity. The opacity in information related to available capacity is partially due to the fragmentation in the industry, as 90% of all fleets own six or fewer trucks in the market. A lot of these fleets use human personnel to plan their work, which results in mediocre optimization with trucks frequently running with empty space--when on the flip side, shippers are desperately seeking capacity for their load.
“Most shippers/brokers don’t engage with truckers beyond each transaction, so they have limited/stale data on truckers,” said LOVC in a statement. “Large logistics companies like FedEx are looking for ways to engage independent truckers; these companies have no means now to do so effectively. SmartHop is becoming the trusted platform for truckers by providing them with free tools that help make their job easier.”
SmartHop looks to build data sets based on its extensive truck fleet network, by analyzing parameters like available capacity, location, and preferences based on which it provides recommendations for loads. Carriers using the SmartHop system will be notified of available loads based on their remaining capacity and can choose to accept them if it is favorable. On the side of the shippers, SmartHop helps them with the transactions, reducing the time spent by shippers in creating accounts to pay new carriers for services.
SmartHop’s CEO and co-founder, Guillermo Garcia, mentioned his concern in bringing VC investment to the company at the early stages, as it could be hard to see eye-to-eye on things. “We were a bit skeptical of bringing a VC on to our company so early on--few VCs like to walk this painful path with founders, and even fewer are truly helpful by understanding the process," he said in a statement. "LOVC is extraordinary, they have been in our shoes as founders which makes them super valuable."
LOVC is a Florida-based early stage fund that invests in startups across different verticals, with a portfolio that covers logistics, cybersecurity, housing, and healthcare. LOVC has raised a $28.5 million fund till date, with the investment in SmartHop coming in as a convertible note financing.
LOVC’s founding partner Esteban Reyes had a few good words to add about SmartHop. “We're honored to join the SmartHop team on their journey. SmartHop is solving a huge problem for the trucking industry that has had limited technology solutions, and we are excited to be working together,” Reyes said.
Right now, SmartHop is looking to press in its advantage in the vertical by catering to its early-adopter customers and partners like Anheuser-Busch InBev, which also has a stake in the startup. The recently raised capital is expected to be channeled towards expanding the company’s engineering and sales team, while ensuring sustained customer success by bettering its algorithms and enlarging its database.