Flexport is raising $260 million from Shopify to build a “leading end-to-end global logistics technology platform,” the company announced this week.
This is a relief for the startup, as it’s been fending off some bad news that has followed the company for the last six months. Locate2u News has been reporting on the dramatic fallouts in management; the job freezes, and strategic changes in the freight startup.
The dust has settled
In September 2023, Flexport co-CEO Dave Clark left under a cloud of suspicion. With transparent answers from Flexport and speculation, it finally emerged when more Clark allies resigned.
But Clark’s departure only opened a can of worms when Ryan Petersen, founder and CEO, blamed Clark for ‘heavily investing in hiring hundreds of software engineers. A few days later, job seekers who had already received an offer letter to work for Flexport were told (via X, formerly known as Twitter) not to report for their first day at work. All posts were on hold.
Now that the dust has settled on Flexport’s troubles (so it seems, at least), Shopify will get convertible notes into Flexport equity in exchange for money.
This comes shortly after Sopify sold its logistics arm of the business to Flexport last year in exchange for equity. Shopify received stock representing a 13% equity interest in Flexport. “This transaction takes the logistics solution Shopify has been building and places it in the hands of a trusted and mission-aligned partner, Flexport,” read the statement from Shopify.
Cash injection for Flexport
It’s the lifeline that Flexport is most likely been waiting for. This multi-million fundraising event has pushed Flexport’s valuation to $8 billion, according to Crunchbase. This comes just two years after it raised nearly a billion in one round.
In November, Flexport acquired Convoy’s technology stack. The digital freight network closed its business two weeks prior due to financial problems. Convoy, which blamed it on a “massive freight recession,” had a market value of $3.8 billion in April 2022.
Flexport only acquired Convoy’s tech and none of its liabilities. However, it retained a small group from Convoy’s core product and engineering team.
Petersen thanks Lütke
“Thank you, Tobi Lütke (Shopify founder and CEO) and your entire team, for this tremendous vote of confidence in our business and partnership,” announced Petersen to his team.
In a statement, Petersen has hailed the last few months since the fallout with his co-CEO as “massive progress” that has been made toward “returning Flexport to profitability.”
Flexport says this boost from Shopify “strengthens” their cash position and hopes this sends out a strong message to customers. “Flexport is building a long-term sustainable business that will continue to deliver best-in-class technology and services for global businesses.”
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