Freight forwarding and logistics have long been an industry that relies on disparate workflows, heavily reliant on a pen and paper model despite trillions of dollars of annual trade. The pandemic has led to an increase in digital adoption as the need to continue commerce superseded the industry’s traditional unwillingness towards anything digital. Nuvocargo is an all-in-one digital platform that’s focused on cross-border trade between the US and Mexico, a $600B+/yr market. The company offers freight forwarding, customs brokerage, insurance, and is also looking to make a mark in trade financing. Supporting businesses with unprecedented transparency and efficiency, the company grew revenue 25X during the pandemic with plans to expand its geographic footprint and headcount.
AlleyWatch caught up with Cofounder and CEO Deepak Chhugani to learn more about how his own personal paint point with his family’s business led to the need for this business now, the company’s future plans, and latest funding round, which brings the total funding raised to $17.3M.
Who were your investors and how much did you raise?
$12M round of Series A funding led by QED Investors alongside new investors including David Velez (Founder/CEO, Nubank), Michael Ronen (Branded/SoftBank, who led Flexport’s $1B Series D), FJ Labs, Clocktower, Karim Atiyeh (Founder/CTO of Ramp), Raymond Tonsing (Caffeinated Capital), Satya Patel (Homebrew), Sebastian Castro (Founder, Kushki), and more. Existing investors NFX, ALLVP, MAYA Capital, Magma Partners, One Way Ventures, Ride Ventures, and others also participated.
Tell us about the product or service that Nuvocargo offers.
Nuvocargo is the only all-in-one digital platform for cross-border trade offering freight forwarding, customs brokerage, cargo insurance and supply chain financing. It combines powerful technology with an exceptional team of experts to seamlessly integrate end-to-end movement of cargo in a single platform.
Nuvocargo acts as an extension of its customers’ team so they can outsource to them all the complexities associated with their US/Mexico cross-border supply chain. It is a trusted partner with dedicated bilingual account managers with years of experience, and all the licenses, compliance requirements, and certifications required to operate on both sides of the border.
What inspired the start of Nuvocargo?
I founded Nuvocargo after personally experiencing the pain of cross-border transport via my family’s Latin America international logistics business, where I learned that freight forwarding was in dire need of digitization. Over the past 18 months, the Nuvocargo team managed to scale the business and grow consistently in an industry that was greatly impacted by the changes brought on by the pandemic.
How is Nuvocargo different?
Nuvocargo is the only truly geographically focused platform in the market, allowing us to move at startup speed in a very complex, usually slow-moving market. We are very focused on US-Mexico trucking and aim to consolidate a dozen services & vendors from freight, trade finance to insurance and more, under one roof.
We are the only all-in-one digital platform for cross-border trade offering freight forwarding, customs brokerage, cargo insurance and supply chain financing from a single platform. We are not a broker or a price comparison tool, but a comprehensive platform for all cross-border shipping needs.
What market does Nuvocargo target and how big is it?
Logistics and shipping market focused on cross-border trade between US and Mexico
Nuvocargo is focused initially on US-Mexico trade. While there is a lot of media focus on US-China trade, according to the Office of the US Trade Representative, Mexico is actually our nation’s largest goods trading partner with $614.5 billion in total (two-way) goods trade during 2019 (China is the 3rd largest).
Freight forwarding is one of the few industries that software hasn’t eaten yet. Nuvocargo is modernizing this $2T market that has traditionally relied primarily on paper, faxes, and spreadsheets. Nuvocargo is replacing the black box of freight forwarding with unparalleled visibility and support for its clients.
What’s your business model?
We describe ourselves as an all-in-one digital platform for trade across the Americas, starting with US/Mexico trade over the road. We are a tech-enabled freight forwarder, therefore our business model today is very similar to that of a 3PL.
How has COVID-19 impacted the business?
COVID-19 has forced the highly traditional and analog logistics industry to adopt technology as its primary way of doing business. A recent study by McKinsey Digital shows that consumer and business digital adoption has vaulted five years forward in a matter of around eight weeks (as of May 2020), a breakthrough expected to deepen in the future.
Everyone is working from home, switching in-person and paper processes with digital transactions and signatures. Nuvocargo has helped all of its customers ease this transition from offline to online and empowered them with tools to smoothly transition towards more digital and modern ways of managing their supply chains.
Nuvocargo grew its revenues month over month since beginning operations in late 2019 and continued to thrive during a pandemic bringing on new customers during a challenging time for the industry.
What was the funding process like?
We were fortunate that the funding process was much faster than expected, from first meeting to term sheets in a few weeks. We think this is because venture investors have realized the massive opportunities for technology and startups across both logistics and in Latin America, two sectors/geographies that have been booming in terms of startup & funding activity in the past few years.
What are the biggest challenges that you faced while raising capital?
Typically, the main challenge is that fundraising distracts you from running the business. Given how fast the process was, we were lucky the distraction didn’t take too long, but that is always an issue with fundraising.
What factors about your business led your investors to write the check?
We believe investors are excited about Nuvocargo due to the market size, our growth (25x in 2020, and consistently above 30% MoM on average since launching 18 months ago), and our team.
What are the milestones you plan to achieve in the next six months?
Nuvocargo plans to use the funds to continue investing aggressively in hiring world-class talent across the logistics industry in the US and Mexico. Specifically, the company will invest more aggressively in engineering, product, design, analytics, and marketing while continuing to invest in sales & operations. Today the Nuvocargo team consists of 35 employees in the US and Mexico, and that number will likely grow to 100+ in the coming 12 months.
Nuvocargo plans to use the funds to continue investing aggressively in hiring world-class talent across the logistics industry in the US and Mexico. Specifically, the company will invest more aggressively in engineering, product, design, analytics, and marketing while continuing to invest in sales & operations. Today the Nuvocargo team consists of 35 employees in the US and Mexico, and that number will likely grow to 100+ in the coming 12 months.
Additionally, we’re excited to use these funds to launch new financial products we’ve been piloting with both shippers and carriers to better serve the needs of our stakeholders beyond purely moving freight and to become their all-in-one solution for US/Mexico cross border trade.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
I hesitate to give generic advice. I think one of my biggest concerns in the startup world is how many people give advice without knowing the specific context of who is receiving that advice. Capital needs for a tech startup that is purely software-driven and with high margins are very different from the ones of a capital-intensive business with a physical component. For example, I would suggest CEOs understand what type of capital needs their business has and be smart about funding the business according to that specific sector and business model.
Where do you see the company going now over the near term?
Our vision has always been to build an all-in-one digital platform to simplify trade for businesses across the Americas. One of the biggest components of that vision is deeply rooted in the movement of money and payments for the international supply chain. In the next few years, we will work to develop additional products and services that help truckers, SMB’s, and businesses across countries with multiple pain points that go beyond the actual movement of goods, namely cargo insurance, working capital financing, trade finance, inventory loans, and more.
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Source: https://www.alleywatch.com/2021/04/nuvocargo-us-mexico-freight-forwarding-deepak-chhugani/
