Two months after taking on a monster $125 million Series A that propelled the company into unicorn territory, package delivery company Veho is back with another huge round — this time $170 million in Series B.
Leading the round this time was Tiger Global, with SoftBank Vision Fund 2 participating. This latest round gives the company $300 million in total funding raised in the past two years and a $1.5 billion valuation.
Existing investors, including General Catalyst, Bling Capital, Construct Capital, Industry Ventures and Origin Ventures, joined the round. Other notable investors in the company include The Chainsmokers’ Mantis VC Fund and the founders and CEOs of Allbirds, Everlane, FIGS, Harry’s, Flexport and Warby Parker.
Two months isn’t that long ago, but let’s bring you up to speed on Veho. The logistic technology company is going after the last-mile section of delivery — how packages get from fulfillment centers to the customer’s door. The global last-mile delivery market is already valued at over $100 billion and is poised to grow to $146.96 billion by 2025.
Veho is not alone in trying to solve this problem. For example, we saw companies like Zoomo, Cargamos, Coco, Deliverr and Bringg announce new rounds last year. However, Veho is standing out from the crowd by offering transparency into deliveries that starts with the option of when, where and how customers want their packages delivered, even with a doorstop returns program so people can easily return items they don’t want, and then real-time communication throughout the whole process.
Given the company has been able to secure customers, like HelloFresh, Misfits Market and thredUP, and that amount of funding in quick succession, there is no doubt that approach is working.
“As e-commerce sales continue to soar, last-mile delivery capacity has not kept pace, nor have logistics companies made the technological investment necessary to support a level of customer service that is expected by a new generation of consumers,” said Lydia Jett, managing partner at SoftBank Investment Advisers, in a written statement. “We believe that Veho has built a leading position in this market with an integrated technology platform that facilitates flexible and reliable delivery services, which drives conversion and customer loyalty. We are thrilled to be partnering with Itamar Zur and the team to support their mission to reinvent delivery.”
Zur, Veho’s co-founder and CEO, told TC that the Series A round put the company on some e-commerce companies’ radar, some that they are in talks with. And having gone through a holiday season with people not getting their purchases on time, the company realized it was in a position of getting in on a rapidly-changing industry. Given the tailwinds, Zur took the opportunity to work with top venture capital firms, like Tiger and SoftBank, even though it had taken the Series A a mere six weeks prior.
In January, the company grew 40% in revenue and another 20% in its customer base. Taking the additional capital means the company can invest in areas of the business earlier than Zur originally planned. Those include making big investments in technology and infrastructure, including warehouse automation.
The company also plans to jump from 500 employees today to 2,000 by the end of the year through hiring of all positions, particularly software engineers, as Veho coordinates a massive tech play. In addition to the hiring, the extra capital will enable the company to provide better benefits for its employees and to go after potential strategic acquisitions.
Veho just began operating in Orlando, its 15th location, and Zur has plans to open eight additional locations by the end of the first quarter.
“The new round has accelerated all of those things,” he added. “And while we are growing fast, we continue to have metrics of 99.9% on-time delivery rate. For e-commerce companies, the cost of manufacturing or a slick website used to be the differentiator, but now logistics is at the forefront of innovation and is the new differentiator.”
Veho getting another large round of funding was not much of a surprise for F-Prime Capital principals Benjamin Gorman and John Lin, who have invested in similar companies, including Logixboard.
Their firm is not an investor in Veho, but Gorman said the logistics ecosystem is so big — $700 billion he estimates just for the trucking market in the U.S. — that it doesn’t take much market share for a company to have a significant business. He cites Flexport’s recent $935 million Series E round as an example.
Many logistics companies are grouped into the fintech universe, where Lin said his firm’s research showed median valuation jumped two times in one year as the average round size increased from $50 million to $80 million.
Over the long-term, Gorman believes that the acceleration of the industry between 2019 and 2020, driven in part by the global pandemic shifting purchases online, isn’t likely to be replicated, but also won’t go back to the old way of doing things, either.
“There are very long-term trends driving logistics, including adoption of technology that has already existed for a while,” Gorman added. “E-commerce is growing, and the drivers of that will continue to be new brands and a shift into penetration of verticals. There will also be new approaches in terms of consumer messaging. Like in the food and clothing space, how something is made and flows through the supply chain and logistics in an environmental way will be part of the brand message.”