Cloud-based transportation management software provider Rose Rocket announced Tuesday it has closed a $38 million Series B round led by Scale Venture Partners with participation from current investors Addition Capital, Shine Capital, Scale-Up Ventures, Founders Club and Y-Combinator. The company has raised $69 million since its inception in 2015.
Co-founder and Chief Strategy Officer Justin Bailie told FreightWaves the company has seen 47x growth since its last raise in 2021 by focusing on product-led expansion.
Related: Rose Rocket raises $25 million for cloud-based TMS
“We believe that software’s effectiveness is determined by the extent of its usage. Change management, especially in the transportation industry with its long-standing nuanced approaches, is a pressing issue to address. Rose Rocket has adopted a product-led growth strategy that allows every user to self-onboard onto the tool. This approach mitigates the risks of business continuity, especially when the industry is witnessing a significant shift in talent and management,” Bailie said.
| Funding details: | Rose Rocket |
|---|---|
| Funding amount | $38 million |
| Funding round | Series B |
| Lead investor | Scale Venture Partners |
| Secondary investors | Addition Capital, Shine Capital, Scale-Up Ventures, Funders Club and Y-Combinator |
| Business goals for the round | Expand into the enterprise fleet market, accelerate product development |
| Total funding | $69 million |
As the company’s customers expand into different markets, Rose Rocket is able to create transparent solutions.
“Rose Rocket recognized that freight isn’t moved in siloes. Rose Rocket’s TMS is built to account for the multiplayer game that is trucking, allowing brokers, carriers, shippers and drivers to communicate and collaborate on one platform,” he said.
The company has also achieved service organization control type 2 (SOC2) compliance — a framework used by third-party technology providers that ensures data is being collected and stored properly.
“This compliance assures our customers that we are doing everything possible to protect their sensitive information. The rigorous SOC2 auditing process focuses on five trust service principles: security, availability, processing integrity, confidentiality and privacy. Achieving SOC2 Type 1 compliance means that we have demonstrated robust controls and safeguards to protect and manage customer data,” said Bailie.
The company disclosed to FreightWaves in February that it was working toward order management for autonomous trucking fleets as well.
Capital deployment
With its funding, Rose Rocket is looking to grow its available solutions and expand into enterprise fleet solutions.
“The funding round is a crucial stepping stone for Rose Rocket’s ambitions, enabling us to scale our network-centric TMS and further invest in product development and user experience for our customers. The Series B will also empower us to expand into the middle market and [larger fleets],” Bailie told FreightWaves.
Bailie went on to explain that the distinct challenges within the supply chain give Rose Rocket an opportunity to prove its solutions’ expertise.
“Recognizing that trucking companies, particularly those with larger fleets, have unique operational patterns, we’re intensifying our efforts on making our TMS more adaptable and personalized,” he said. “Our emphasis lies in ensuring that Rose Rocket’s TMS accommodates individual ways of working, from customizable fields to unique business rules. Our vision is to evolve Rose Rocket into a new generation of software that serves everyone in trucking, from a solitary broker to extensive fleets with thousands of trucks.”
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You have to remember that the venture capital players are still sitting on lots of investor cash they need to show a return on. This pushes them into bad decisions investing in things they know nothing about. Many of those investments, if not most, will fail. They know this.
Their job is to try to get their money back on the failures by selling the company or the tech to simply recover their investment. In those cases, the founders of those companies are almost always left with nothing and the VC eventually gets their LP and GP investor money back.
But, the VC knows that 2% to 3% of their early bets will do well and they’ll manage to flip them for 50x to 100x or more. That is where the fund return comes from.
In the case above, the VC’s are just placing more random bets, following a lead investor who likely has prior money invested they need to protect from the series A round. The rest of the VC’s participating are just following the lead investor, spreading their bets. You can see the investor list is long so each fund is only exposed around $7m.
Over time it’s only company valuations and the deal terms that change. VC’s are always investing in markets good and bad. They’re not too concerned with the losers as they’re always protected. It’s the founders and the employees that shoulder the most risk burden when they’re funded by VC money as the VC is calling all the shots.
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yes if you go from $10k to $470k in sales it is 47x in growth but the question is with all these cos is are they profitable? nobody knows. nobody says. did they blow thru that last $25m series A $ from Oct 2021 in just 18 months? 😳 i guess the VC FOMO frenzy of throwing huge money into unprofitable startups hasn’t ended yet. gimme some LOL