Why This Jeff Bezos & Bill Gates Backed $3 Billion Startup Is Shutting Down

Imagine getting both Jeff Bezos and Bill Gates as investors in your startup. It surely sounds like a recipe for success, right? But not in the case of US-based startup Convoy, which is shutting down after eight years of existence.

What Does The Startup Do?

conoy

Convoy is a Seattle-based trucking startup whose investors include Jeff Bezos and Bill Gates. Started in 2015, Convoy is an online platform that connects truck drivers with freight companies. The aim was to prevent trucks from driving ¡°empty miles¡± without loads. The trucking logistics startup was initially termed the 'Uber for trucking'.

Convoy worked towards building technology to find smarter ways to connect shippers with carriers while solving some of the toughest problems that result in waste in the freight industry.

When Did Jeff Bezos & Bill Gates Invest In It?

indiatimes

In the year 2017, Convoy mentioned that Bill Gates was among the investors who would pump over $60 million into the trucking startup.

Before that, the startup had raised $2.5 million from a group of investors in its foundation year of 2015, among whom were Amazon founder Jeff Bezos, Salesforce.com CEO Marc Benioff, Dropbox CEO Drew Houston, and former Starbucks President Howard Behar, among others.

Also Read; Bill Gates Shares The Best Advice He Has Received From Warren Buffett

Why Is The $3 Billion Startup Shutting Down?

Valued at more than $3 billion until last year, Convoy is now closing down its business after a four-month search for an acquirer failed. Its founder and CEO Dan Lewis told employees in a memo on Thursday, informing them, ¡°Today is your last day at the company.¡±

¡°Following an exhaustive process spanning many, many months during which we explored all viable strategic options for the business, the result is where we are today,¡± Lewis wrote. ¡°Convoy is closing the doors on its current core business operations and exploring and evaluating strategic options for what might come next.¡± According to a memo sent to employees Thursday morning, Lewis said the company faced both an ¡°unprecedented freight market collapse¡± and ¡°dramatic monetary tightening.¡±

¡°This combination ultimately crushed our progress at the same time that it was crushing our logical strategic acquirer¡ªit was the perfect storm.¡±

Which Big Companies Has The Startup's CEO Previously Worked For?

ycombinator

Convoy is run by co-founder and CEO Dan Lewis, who formerly led new shopping experiences at Amazon and, before that, worked at Microsoft.

Also Read; Why Amazon Shareholders Have Filed A Lawsuit Against Jeff Bezos

How Has It All Happened?

convoy

The startup was valued by investors at $3.8 billion last year. It had already trimmed down its staff to about 500 people from a peak of 1,500 and was on track to run out of money in a matter of weeks, said people familiar with the matter, as per a Bloomberg report. Most remaining employees were let go Thursday. CEO Lewis said the market conditions afflicting Convoy ¡ª ¡°a massive freight recession and a contraction in the capital markets¡± ¡ª also prevented its most likely acquirer from closing a deal. Convoy had raised more than $1 billion from investors, according to data from research firm PitchBook.

Many of those investors could see their stakes go to zero. However, it¡¯s a grand slam for Allen & Co., according to PitchBook data. The New York-based investment bank wrote a small check to the startup in 2015, when Convoy was worth less than $60 million, along with more than two dozen angel investors, including Bezos, Reid Hoffman, and Marc Benioff. Gates invested in a later round. Capital G, an Alphabet Inc. venture group, and Al Gore¡¯s Generation Investment Management were also investors in Convoy, according to PitchBook.

Allen & Co. sold all its shares last year, according to the data, at the same time that Baillie Gifford, T. Rowe Price, and other investors valued Convoy at $3.8 billion in a new funding round. As per the report, Convoy is one of many logistics startups affected by falling prices and demand for shipping, plus a deteriorating market for venture capital fundraising.

For the latest and more interesting financial news, keep reading Indiatimes Worth. Click here