Ontruck, a Madrid-based startup that has built an “on-demand logistics platform” to connect businesses directly with road freight carriers, has raised $10 million in Series A funding.
The round was led by VCs Atomico and Idinvest, with participation from existing backers Point Nine Capital, La Famiglia, and Samaipata Ventures. Noteworthy, LocalGlobe also previously invested in the company but I understand hasn’t joined this current (and oversubscribed) round.
Founded in 2016, Ontruck is one of numerous startups attempting to ‘digitise’ the road freight market and bring with it a little more transparency to what is still a very arcane and opaque industry. It enables companies who have road freight shipping needs to get an instant price for their desired destination, date, and truck specifications. Precise pick-up slots can be selected, and, a bit like an Uber, shipments are traceable throughout the journey.
On the supply side, truck drivers and large fleet managers accept jobs via the Ontruck app on a first-come-first-claim basis in accordance with their schedule and whereabouts, thus “increasing the utilisation of their assets, and getting paid automatically, on-time and with reliability”.
This might all sound painstakingly obvious, but you need to keep in mind that logistics, including road freight, is still quite an old-fashioned industry where a lot of business is conducted over phone, email and even fax, and via a middle person — a freight broker, if you will — who manually matches supply and demand and takes up to 15 per cent for doing so. As you can imagine, this makes for a cumbersome and quite opaque process, with limited traceability.
In addition, I’m told that a lot of road freight businesses are independent owner-operator truck drivers or similarly small in size, meaning it’s an industry that suffers from a lot of fragmentation and under utilisation. To demonstrate the point, up to 40 per cent of return journeys are done empty-handed. In other words, there’s also a huge environmental knock-on effect, something that Atomico Partner Carolina Brochado highlighted in a call.
In fact, I understand that Brochado and Atomico as a whole have been eyeing up the space and broader B2B transportation for a while as part of the firm’s investment thesis and mission to back companies that can not only be very profitable but leave a genuine and positive dent on this earth.
As part of this process, Brochado says the VC tracked 14 or so startups in the road freight marketplace space and that Ontruck particularly impressed because of its founding team, which, for example, counts former Delivery Hero VP of Engineering Samuel Fuentes as CTO.
Another aspect was the company’s regional approach. The is seeing it focus on distances of up to 150 miles in key transportation hubs, gunning for density as a means to scale, rather than longer and therefore potentially more profitable journeys if looked at only in isolation.
In a call with Ontruck co-founder and CEO Iñigo Juantegui, who previously founded La Nevera Roja and exited to Rocket Internet, he told me that the startup adds value in three ways. The most important and perhaps trickiest being its ability to offer real-time pricing.
This sees the company take on some of the risk as it is its algorithm and continually growing business intelligence data that dictates price, rather than an auction or tendering model.
If Ontruck sets the price too low it runs the risk of either reducing its own margin and potentially even losing money or having no one on the supply side accept the job. Likewise, price a route too high and the platform won’t remain competitive.
Another value-add is digitising the entire road freight booking process, meaning all of the admin, including payment and tracing a shipment, is done via its app. Lastly, it is developing tools to help with routing and optimising capacity for the truckers and fleet managers using the Ontruck platform.
Ontruck is currently operating in Spain only but is testing other European markets, including potentially the U.K., and, says Brochado, definitely has its sights set on being a pan-European leader in the space. Competitors include France’s Convargo, and perhaps Trucker Path and Cargomatic in the U.S.