PayCargo, a fintech for the shipping industry, raises $ 130 million – TechCrunch

Freight and freight services are one of the more fragmented and analog verticals in the industrial world, with hundreds of thousands of businesses involved in countless aspects of a process that is fundamentally physical (not digital) in nature. Today, a company called PayCargo, which built a platform to bring one key aspect of it – how companies in the industry of shipping products and specifically consumer goods pay each other – into the modern and digital age, announces $ 130 million in financing to expand its platform.

The financing, a Series C, comes from a single investor, Blackstone Growth, and PayCargo – based on Coral Gables, FL – said it will be used to expand to more geographies, to expand more financial and business data products, and potentially also for M&A, since the area for providing services to the shipping industry is as fragmented as the shipping industry itself.

PayCargo does not disclose its valuation, but in particular the company is an example of one of the types of startups that do not find it challenging to raise money at the moment: It is profitable, and it has been since it was founded in 2009; it works in a business vertical that still has a long way to go before it is saturated with competing services that fill the same need as PayCargo is; and that the business vertical itself represents an enormous opportunity with continued growth and globalization of e-commerce in general.

“Last year, we moved over $ 10 billion in payments, and we are now in the process of $ 20 billion in 2022,” PayCargo CEO Eduardo Del Riego said in an interview.

The company currently integrates with around 50 of the larger freight management systems, transport management systems, ERP and terminal operating systems used by shipping and freight companies – and again, that there are 50 “larger” platforms in the broader operational software category show how fragmented all this is – and they 40,000+ customers using PayCargo (list includes Kuehne + Nagel, DHL, DB Schenker, BDP, Seko Logistics, UPS, YUSEN Logistics and suppliers such as Hapag-Lloyd, MSC, Ocean Network Express, Alliance Ground, Swissport and Air France) Currently buy and pay more than 5,000 global logistics providers, and the number continues to grow.

For a certain perspective on this number, when we covered a more modest $ 35 million Series A investment in the company from Insight partners in 2020, it had integrations with 4,000 suppliers and worked with 12,000 customers. Between then and now, it also collected a Series B of 125 million dollars, where it noted that there are potentially up to 40,000 suppliers to use for integrations in the years ahead. In fact, Del Riego remarked to me that PayCargo’s current size still represents only a small fraction – less than 2% – of the total market.

At the heart of the PayCargo platform is a set of cloud-based tools for those who order freight services over land, sea or air to send payments, and for suppliers to receive them, a set of APIs to integrate the tools into a company’s existing FMS and other IT , as well as financing services for those who do not want to pay for the shipments in advance.

E-commerce experienced enormous activity during COVID-19 – when consumers who did not have many places to go and spend money bought significantly more goods online.

Growth in the freight market may have slowed since the peak – not just because we as a whole are moving back to the physical world; but no doubt other factors around the world such as wars and embargoes change the way things move – but Del Riego pointed out to me that this has not represented a decline for the company in terms of own revenues, since the cut is made as a fixed tax on each transaction, not the size of the transactions themselves.

As with others that build IT services for the shipping and shipping industry – they include Zencargo, FreightHub, Sennder, Flexport and Cargo.one – the opportunity is about building more cloud-based services that work smoothly and securely and with other parts of the operation puzzle; but in many cases it’s still just a matter of getting tools to replace paper and fax machines.

And while that means a good percentage of PayCargo’s customers have not really internalized or actually yet doubled on “digital transformation”, it is an opportunity for the company to become a partner and provider of more data-driven services for its users. fill this gap as well: the company, by virtue of conducting transactions between different companies in the ecosystem, becomes a holder of a huge amount of data on how the industry works: how different products are shipped, times and prices, most active geographies and more. Companies will want to have that information to help shape their own strategies and know how others are performing in the market, but in many cases that type of customer lacks PayCargo working with the tools to extract, analyze and gain insight from that information itself .

There is also another reason why Blackstone was interested, and why PayCargo has the opportunity for a larger fintech game here.

“I think today the opportunity is to provide the data in a digestible and synthesized way, to take it and produce it for these customers,” said Vini Letteri, senior MD and head of financial services for Blackstone Growth. “Yes, in the future there may also be a handover of data. But as supply chains are disrupted, there will be more demand for this data, so products to access that will be valuable.”