On-demand delivery platform Frayt announced Tuesday it has closed $7 million in Series A funding led by Refinery Ventures with participation from Capital Midwest, Venture 53 and the JobsOhio Growth Capital Fund to continue executing its objective of not only building a marketplace for shippers to obtain last-mile services but to encourage its driver network’s entrepreneurial spirit.
“We are looking to empower these independent contractors and truly treat them as owners of their businesses,” Luke Denny, co-founder and CEO, told FreightWaves. “These guys and gals are out there driving, running a business, utilizing technology and went and bought a commercial vehicle. We recognize that entrepreneurship and we are trying to foster that within our network.”
Frayt was founded in Cincinnati in 2018 after one of its founders could not get a local carpet delivery to his home for a few days, which seemed unreasonable with such advancements in the on-demand space including work being done by ride-share company Uber.
“We recognized how much untapped potential there was with cargo and sprinter van owner-operators would need help filling up free time throughout the day. We watched the Uber model and others take off so the question was, how do we connect these businesses with owner-operators over a software platform,” said Denny.
|Funding amount||$7 million|
|Funding round||Series A|
|Lead investor||Refinery Ventures|
|Secondary investors||Capital Midwest, Venture 53 and the JobsOhio Growth Capital Fund|
|Business goals for the round||Expand teams for product growth, market development and fill out leadership team|
|Total funding||$10 million|
Since its founding, the company has accomplished building its on-demand SaaS platform, available on desktop, mobile and through API integrations, connecting shippers to drivers for same-day or scheduled out deliveries.
According to Frayt, it now serves more than 50 markets, mostly in the Midwest, with over 12,000 drivers. Frayt facilitates deliveries for more than 300 companies, including Bridgestone, The Tile Shop, Cargill, Sherwin-Williams, Kroger, Fern and Wesco International.
“The Midwest is strong for us. The beautiful thing about having our headquarters in Cincinnati is we can reach 80% of the U.S. population within 500 miles, so we are very dense in this region,” Denny explained.
As Frayt takes hold of its local region, the potential to scale has become more attractive for not just its founders but industry investors as well.
“To scale this out at the speed that we want to, seeking venture capital made the most sense. The venture world is swinging from the grow-at-all-costs model to who has sustainable businesses. We became more attractive,” Denny said.
Including the growth potential of last-mile services and Frayt’s mission to enhance its product offerings alongside that growth, investors were excited to join the ride.
“The $124B+ last-mile delivery industry hasn’t kept up with expectations, which became more apparent during the pandemic,” said Refinery Ventures’ managing partner Tim Schigel in the news release. “FRAYT’s innovative technology empowers companies to extend their delivery services, ensuring every item is delivered quickly and efficiently while saving time and money. I look forward to working with Luke and his team to help scale and grow the company in 2023 and beyond.”