Veho Valued at $1B After $125M Series A Funding

Veho: Revolutionizing Last-Mile Package Delivery

Veho, a technology-driven startup, is focused on resolving the challenges inherent in last-mile package delivery – the crucial step of getting shipments from fulfillment centers directly to customers. The company distinguishes itself by prioritizing transparency and customer control over the delivery process.

Rapid Growth and Expansion

Since securing its initial seed funding in the summer of 2020, Veho has experienced a remarkable 40-fold increase in revenue. Simultaneously, its workforce has expanded from a team of 15 to over 400 employees, as reported by Veho co-founder and CEO, Itamar Zur.

Currently operating in 14 U.S. markets, Veho intends to extend its reach to 50 markets by the close of 2022. This expansion, alongside continued technology development and the rollout of a doorstep returns program, is being fueled by a recently announced $125 million Series A funding round.

Series A Funding and Company Valuation

The Series A funding round, which valued Veho at $1 billion, was spearheaded by General Catalyst. Additional investors included Construct Capital, Bling Capital, Industry Ventures, Fontinalis Partners, and Origin Ventures. This latest investment brings Veho’s total funding to $130 million, according to Zur.

Strategic Capital Allocation

Zur explained the decision to raise a substantial amount of capital upfront, stating that Veho has evolved into “a substantial platform” requiring resources to sustain its rapid growth trajectory.

He emphasized the ongoing e-commerce boom and the increasing importance of customer experience, particularly regarding visibility and data. Veho aims to capitalize on this trend by accelerating its growth through increased capital investment.

Addressing a Significant Market Opportunity

While Amazon currently dominates approximately 50% of the last-mile delivery market, Zur sees a significant opportunity to serve the remaining 50% of e-commerce businesses. These businesses are seeking delivery solutions that are faster than the typical seven to ten business days.

Veho’s technology effectively connects package delivery demand with a network of qualified driver partners. This allows customers to receive precise delivery timeframes and real-time updates, including notifications when the driver is en route. Customers also have the ability to reschedule deliveries, modify addresses, or provide specific delivery instructions.

The Genesis of Veho

The company’s founding was inspired by Zur’s personal experience with a frustrating delivery issue. A meal delivery subscription he ordered never arrived, and he encountered significant difficulties contacting the delivery company, ultimately leading to cancellation.

Zur observed that consumers are becoming increasingly intolerant of late or missed deliveries, particularly in the competitive e-commerce landscape. He believes Veho provides a solution for companies seeking to match Amazon’s delivery speed and build stronger customer loyalty.

Competition and Differentiation

Veho is part of a growing number of companies innovating in the last-mile delivery space, with several others recently securing funding. Examples include Zoomo, Cargamos, Coco, Deliverr, and Bringg. Walmart has also launched its Walmart GoLocal program to leverage its delivery network.

Zur differentiates Veho from companies like Deliverr, positioning it as a competitor to traditional national shipping companies. He argues that their technology is outdated and not designed for the demands of modern e-commerce, while Veho was “entirely around the needs of e-commerce customers.”

Market Growth and Future Outlook

The global last-mile delivery market was valued at approximately $108 billion in 2020 and is projected to grow by $146.96 billion over the next four years. North America is expected to contribute 39% of this growth, according to Technavio.

The surge in e-commerce has placed significant strain on logistics and parcel delivery sectors, which have faced challenges such as the “shipaggedon” of 2020 and broader supply chain disruptions.

Positive Impact on Customer Loyalty

Veho aims to create a seamless delivery experience that fosters trust between consumers and e-commerce companies, encouraging repeat business. Early results indicate that Veho’s customers have experienced a 20% increase in repurchase rates, a 40% increase in customer lifetime value, and an eight-point improvement in net promoter scores compared to those using traditional shipping methods.

Investor Confidence and Market Potential

Kyle Doherty, managing director at General Catalyst, highlighted the substantial opportunity within the $800 billion e-commerce market, with the U.S. accounting for half of that total. He anticipates annual growth of around $100 billion.

Doherty, like Zur, experienced firsthand the frustrations of package delivery, particularly the issue of package theft in cities like San Francisco. He believes that technology can significantly improve the logistics experience, and he was impressed by Zur’s understanding of both merchant and consumer needs.