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Consumer habits massively shifted online during the coronavirus pandemic, which meant businesses needed to adapt delivery models. The shift gave delivery and logistics companies a massive boost.
Onfleet, a last-mile delivery-management software company, is one such provider. The startup just raised a $14 million Series A led by Kennet Partners at the end of October following a year of massive growth.
Onfleet powers deliveries for companies including Kroger, Sweetgreen, Drizly, Imperfect Foods, all of which saw demand skyrocket in 2020. It helps brands manage third-party delivery fleets via its platform, which features delivery tracking, notifications, proof of delivery, and other logistics.
Founded in 2015, the company says it’s been profitable for “several years.” It raised about $5 million in equity funding through its seed round between 2015 and 2016, followed by revenue-based debt financing from Lightyear Capital. Previously, the company had been slowly hiring in line with revenue growth, Khaled Naim, CEO and co-founder of Onfleet, told Business Insider.
But when the coronavirus pandemic hit, it saw demand spike.
“It was clear that we needed to really scale the team ahead of our revenue growth,” Naim said. “Our revenue is growing really fast, but new customers were coming in the door. We onboarded around 100 customers in April, alone.”
Onfleet is growing its team and building more tools for merchants
Stretched thin through the initial demand earlier in the year, Onfleet has been hiring engineers and customer service employees to help keep up with growth.
“On the roadmap ahead, there is a lot of stuff that we’re working on,” Naim said. “What we’re thinking about now is how we can help more with the labor side of the equation.”
From sourcing drivers to training and onboarding, Onfleet is working on ways to help retailers not only manage deliveries when they happen, but proactively set up infrastructure to manage a delivery model.
Onfleet reaches customers both through traditional sales and via a network of partners that also work with merchants, like Olo, which works with restaurants, and GrocerKey, an e-commerce platform for grocery stores.
When it comes to raising, Naim says that founders should be mindful of how the type of financing they’re seeking fits into the business model.
“My first piece of advice is always to make sure that your business is the right kind of business for the financing that you’re looking to do,” Naim said. While some business models thrive on venture capital, others, like Onfleet, may be better suited to debt financing.
“That was a realization I had that led to us deciding to build a business at break even, and not rely on venture capital,” Naim said.
And while remote pitching can be a challenge from a networking perspective, there are some advantages.
“Usually you’re running around town, driving up and down Sand Hill Road,” Naim said. “You end up being able to do one or two meetings a day. With just Zoom meetings, I was able to do many more. So it felt more efficient.”
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Source:: Businessinsider – Finance