Forager, the Chicago-based technology and logistics company focused on cross-border freight, announced Wednesday morning that it had closed a $10 million Series A round of venture capital funding.
The Series A was led by Silicon Valley firm U.S. Venture Partners (USVP); previous investor Chicago Ventures and new investor Soma Capital also participated in the round. Forager's valuation was not disclosed.
CEO Matt Silver, VP of Finance & Analytics Jordan Salins, and COO Jessie Essman founded Forager in January 2019. Silver's industry experience came from growing up at Coyote Logistics, the freight brokerage founded by his father in 2006, where he managed cross-border operations in Mexico and Canada. In November, Forager launched the first version of its cross-border freight matching and pricing platform, SCOUT.
"Forager has a totally unique solution that was purpose-built to address the challenges associated with cross-border shipping," said Rick Lewis, USVP general partner, in a statement. "The Forager team has unmatched industry expertise that positions the company to capitalize on this massive market opportunity while benefiting shippers, carriers, and consumers. We are thrilled to support Forager as they pursue this important mission."
Now Forager has 40 employees and is hiring mostly on the technology side of the business, Silver said. We talked about the experience of raising capital during a pandemic, building a technology company, and Forager's long-term thesis about North American supply chains.
"We're definitely going to hire," Silver said. "With what's going on with the economy and coronavirus, there will be talent available that maybe wouldn't have been available before, both on the logistics side and the tech side."
Silver said he went to Silicon Valley to talk to venture capitalists for the first time in December; previous funding had come from Chicago Ventures and a handful of strategic investors with particular needs around cross-border logistics. That first trip was intended to be information-gathering, but Silver said he quickly found himself in conversations with firms that were seriously interested.
"We met everyone from a person who worked for a large logistics tech company and who's now at a venture capital firm, all the way to people who don't even know what freight is or what logistics actually means," Silver said.
Initial conversations focused on issues that Silver's team were long familiar with: global economic relations, trade flows, the progress of the United States-Mexico-Canada Agreement, and other players in the space. But in January, investors started asking about how the coronavirus would affect Forager's business.
Silver said that when the virus spread to the United States, it became clear that Forager's business would be impacted — some customers, like auto parts suppliers and OEMs, are shut down, while other consumer packaged goods customers are shipping significantly more volume.
The liquidity from the round will allow Forager to weather the storm and focus on improving its technology platform.
"The biggest change in our hiring plan now versus two months ago is probably that we're pulling back on hiring around sales initially," Silver explained. "Our focus will be tied to building out our product. We can't control how much freight our customers ship — we can't make automotive suppliers ship when people aren't buying cars — but what we can control is how well and how quickly we build our technology and how well we build up the supply side of our marketplace."
Forager plans to hire engineers, including managers who will report to the chief technology officer, and additional product people, including a head of product.
The current iteration of SCOUT provides instant rates for cross-border capacity, but what Forager ultimately wants to build is a whole operating system that better manages all kinds of cross-border shipping, including e-commerce supply chains. In the near term, the next version of SCOUT will be released in April or early May. It will display additional details around scheduling, will provide more information around pricing to help customers make better decisions, and will include more connections and integrations to other freight tech platforms.
"I still see so many emails every day between customers, facilities, customs brokers and operations teams," Silver said. "There are so many emails we can clean up and declutter and get into a system: everything from reference and pickup numbers to truck and trailer numbers, information going to customs brokers and facilities. We're pulling it into a system of record and sharing it across the group."
At the same time that Forager is working on solving the day-to-day inefficiencies of cross-border logistics, Silver and his team are articulating their belief that the North American economies will grow more integrated. If the trade wars and COVID-19 have revealed one thing, it's that trans-Pacific supply chains are more fragile, and less responsive, than they appeared. Meanwhile, automation is reducing the labor arbitrage between Asia and North America, which should encourage the near-shoring of manufacturing capacity—all positive trends for cross-border freight.
Silver's advice to founders trying to raise money is to be honest with everyone and not try to force deals that aren't meant to be.
"Keep your head down, don't reek of desperation, focus on the investors who actually make sense for you, and get warm introductions," Silver counseled. "Having the right team around you, internally, but also investors and advisors — ideally someone who's done it before — is invaluable."
And the No. 1 thing investors are looking for right now?
"A path to profitability," Silver said, adding that he was happy to be hiring during the coronavirus crisis.
"There are so many layoffs going on right now, the industry and Chicago need a boost," Silver said. "Opportunities to get another job right now are tough, but we're still interviewing through Zoom and hiring people. We've been able to onboard people completely remotely — the only issue is getting people laptops!"
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