smarthop raises a $12m series a to ease trucking logistics

The Rise of SmartHop: Revolutionizing Trucking Logistics with AI

Founders who launched startups in February 2020, immediately preceding the pandemic, likely encountered significant challenges. However, companies focused on stabilizing supply-chain operations may have unexpectedly found themselves well-positioned for success. This is precisely the trajectory of SmartHop, a Miami-based startup leveraging artificial intelligence to enhance the efficiency and profitability of interstate trucking routes, while simultaneously reducing administrative burdens for drivers.

Securing Series A Funding

SmartHop recently announced the completion of a $12 million Series A funding round, increasing the company’s total funding to $16.5 million. This investment was spearheaded by Union Square Ventures, a firm with a notable portfolio including companies like Stripe, Twitter, Coinbase, Etsy, MeetUp, SkillShare, and Duolingo.

Addressing a Complex Industry Challenge

SmartHop tackles a multifaceted problem within the trucking industry by providing a streamlined solution. Understanding the difficulties faced by interstate truck drivers is crucial to appreciating the value SmartHop delivers. CEO and co-founder Guillermo Garcia, a former truck driver himself – having operated a pet food delivery service while in college in Venezuela and later scaling it to a 500-truck operation – possesses deep insight into the industry’s intricacies and pain points.

From Humble Beginnings to AI-Powered Logistics

“I began my first trucking company by asking my parents to clear out their garage, which served as my initial distribution center,” Garcia explained. He further noted that the trucking market operates with a dynamic nature, akin to the stock market, making accurate predictions exceptionally difficult.

The Scale of the Trucking Industry

According to a 2019 report by The American Trucking Associations, the trucking sector represents a substantial $791.7 billion industry, accounting for 80.4% of the nation’s freight bill. A significant portion of this industry – 91% of trucking companies – consists of small businesses operating six or fewer trucks, with many being owner-operators.

Inefficiencies in Load Acquisition

Traditionally, truckers have relied on manually searching through applications or websites of approximately 15,000 different brokers to secure loads. This fragmented and uncoordinated approach often resulted in unpredictable monthly revenues and numerous other challenges for drivers.

How SmartHop Provides a Solution

SmartHop offers a solution to these issues. Consider Bob, an owner-operator in Atlanta with a single truck, who secures a load destined for Seattle. It’s financially impractical for Bob to commence the journey without identifying potential return loads or confirming Seattle as the optimal turnaround location. Perhaps Chicago offers more outbound freight opportunities.

The Pre-SmartHop Experience

Prior to SmartHop, Bob would have been required to contact brokers via phone to negotiate loads, often while on the road, lacking visibility into his workload for the coming weeks.

SmartHop’s Intelligent Load Recommendations

With SmartHop, Bob can input details regarding his truck’s capacity, preferred routes, and other preferences. The platform then recommends loads that maximize his profits and minimize travel time. This functionality is comparable to navigation apps like Waze, which suggest nearby points of interest, such as Starbucks, with minimal detours.

Personalized Routing and Preferences

“Some drivers avoid routes through New York City due to tolls, bridges, and traffic congestion,” Garcia stated. “Therefore, they will decline loads requiring travel through that area, regardless of the potential payout.”

Autonomous Load Booking

For a fully automated experience, SmartHop can autonomously book loads on the driver’s behalf, allowing them to focus solely on driving and truck maintenance.

Continuous Learning and Optimization

The more a driver utilizes SmartHop, the more effectively the platform learns their preferences, leading to increasingly accurate load suggestions and bookings.

SmartHop’s Fee Structure

SmartHop charges a transaction fee of 3% of the gross sale. “Our financial interests are aligned with our users; we profit when they profit, and we incur no charges during their downtime,” Garcia explained.

Union Square Ventures’ Perspective

Rebecca Kaden, managing partner at Union Square Ventures, commented, “Union Square Ventures prioritizes businesses that leverage technology to create networks and expand access. We were particularly impressed by Guillermo and the SmartHop team, as they are doing exactly that – empowering owner-operator trucking companies with software to optimize their operations and compete effectively with larger players.”

Strategic Partnerships and Investments

Ryder, a Miami-based logistics company, also participated in the funding round through its venture arm, RyderVentures, marking its inaugural investment. Equal Ventures and Greycroft, who contributed to SmartHop’s seed round, also reinvested.

Real-World Testing and Validation

“Many startups possess excellent technology but lack opportunities for real-world testing,” said Karen Jones, Ryder executive VP, CMO, and head of new product innovation. “Software is ineffective without practical application.” Prior to investing, Ryder collaborated with SmartHop to pilot the product on its fleet of 275,000 trucks.

Current Status and Future Plans

Currently, SmartHop employs 50 full-time staff and supports 100 trucks utilizing the platform. These trucks generate an average gross revenue of $10,000 to $15,000 per month.

The new funding will be allocated to product development and the introduction of embedded financial products. Smaller trucking companies often lack the negotiating power to secure favorable rates on fuel and insurance. SmartHop’s collective volume of drivers aims to address this disparity. Furthermore, the company will offer invoice factoring, enabling drivers to sell 45-day invoices to SmartHop and receive payment within 24 hours. “Our extensive data collection allows us to perform more accurate and advanced underwriting,” Garcia concluded.