FreightTech platform Zerobroker announced Wednesday it has raised a $6.5 million seed round to support the company’s technological and customer growth as it aims to bring shippers and carriers closer together.
The round saw participation from freight forwarder Flexport, FundersClub, Streamlined Ventures and other undisclosed contributors. The company has raised close to $7 million since being a part of YCombinator’s (YC) winter 2021 cohort.
The Zerobroker product launched in February to oversee all steps of executing a shipment from building a load to finding the ultimate carrier and managing all paperwork while providing transparency of load operations to both shippers and carriers.
| Funding details: | Zerobroker |
|---|---|
| Funding amount | $6.5 million |
| Funding round | Seed |
| Investors | Flexport, FundersClub, Streamlined Ventures, YC |
| Business goals for the round | Hire engineers to continue building new applications within its platform |
| Total funding | $6.68 million* |
“Logistics is the backbone of any economy and it affects every single product and service that exists. But the industry is still far behind in terms of technology adoption and innovation when compared to other industries,” said Ullas Naik, general partner at Streamlined Ventures.
“Most of the startups in the industry are trying to optimize some aspect of logistics. Zerobroker completely redesigns the logistics from the ground up by bringing all disconnected parts of the logistics industry into one platform, automating most repetitive tasks and challenging the industry’s status quo with their ‘no-broker’ innovation,” Naik said.
Bye-bye brokers?
Zerobroker founder and CEO Georgy Melkonyan, who earned a doctorate in transportation engineering and has worked in the industry for more than 15 years, said he is dedicated to digitizing the industry but, most importantly, to bringing the shipper and carrier closer together.
“Historically, shippers and carriers had to work with brokers because the industry was offline,” Melkonyan said. “Right now is a good time to bring this product to market because there has been enough digitalization in the industry. Truckers have smartphones and some sort of digitalization in their operations. … So let’s bring an all-in-one solution for shippers to run their entire operation in one place and cut the unnecessary fat and have them directly connect with truckers.”
Melkonyan granted that executing this plan and building this technology was much more difficult than he initially expected. Yet as Zerobroker focused on rate transparency and direct communication between the parties, Melkonyan has continued to see 50% customer growth month over month since launching in February and told FreightWaves the company has not churned a single shipper customer, which range from small and midsize businesses to large public companies.
“We don’t charge a dime on transactions and we share all information on loads between both parties. We are just a software platform that gives logistics managers direct access to truckers,” said Melkonyan.
This neutral approach enables the shippers to reach out directly to carriers, and vice versa, when issues arise. For Zerobroker, revenue is generated from a flat monthly subscription fee for both parties to leverage its platform that automates all of the internal processes to keep operating costs lower for everyone involved. These operations include managing insurance, vetting carriers and building loads.
With its new capital, Zerobroker is now focused on continuing to add more customers while providing valuable solutions for its current loyal ones. This means hiring more engineers to focus on some of its current concerns, including contract pricing.
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David
So they are charging a fee to connect shippers with carriers? Isn’t that what a broker does?
But now the shipper pays the fee to be matched with carriers, and now has to manage all of the issues that come along with managing carriers?
Good luck.
My opinion matters cuz I said so
Brokers exist because there are bad carriers. Platforms like this are created because there are bad brokers.
I don’t see a working solution for either anytime soon.
Joe
Zerobroker sounds like they are a broker in a way themselves
James Bauman
Concept is good. Brokers take the most % during downturns; because they can. This is more damaging to carriers; and therefore shippers; than need be. My 2cents for now: take a % vs fee. Just make that % fixed and transparent. Fee method doesn’t seem smart (motivating, sustainable). I’m a small carrier MC 895097.