Convoy Sees Itself as the Uber of Local Trucking

Convoy, a start-up founded by former Amazon employees, will announce on Wednesday that it has raised $16 million in a new investment round led by Greylock Partners.

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KC McGinnis for The New York Times

SEATTLE — It has become a tech industry cliché to describe new on-demand businesses as “Ubers for X” — with X being anything from furniture movers to dispensers of medical marijuana.

But the expression has not become so overused as to have frightened away a prominent group of investors from the next big industry they are eager to Uberize: trucking.

Convoy, a start-up in Seattle founded by former Amazon employees that has created an on-demand service for local truckers, plans to announce on Wednesday that it has raised $16 million in a new investment round led by Greylock Partners. New investors also include Jeff Wilke, a top Amazon executive, and Kevin Systrom, the co-founder and chief executive of Instagram.

Reid Hoffman and Simon Rothman from Greylock and Hadi Partovi, a serial entrepreneur who now runs the nonprofit Code.org and who previously invested in Convoy, have joined the company’s board of directors. Last year, Convoy raised $2.5 million from a group of investors including Jeff Bezos, the chief executive of Amazon, and Marc Benioff, the chief executive of Salesforce.

Convoy began its service last year with the goal of giving local truckers — who specialized in jobs that could be completed in a day — a more efficient way to connect with clients who needed goods shipped.

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Local trucking is a heavily fragmented industry, populated by small operators, many of them with 10 or fewer trucks. Matching truckers with clients is typically handled by brokers, who do much of their work by phone, said Dan Lewis, the chief executive of Convoy, who has worked at Amazon.

Convoy gives truckers a smartphone app that they can use to accept a job from shippers. An Uber-like interface allows their clients to see the truck on a map as it heads to its destination. Mr. Lewis said Convoy charged truckers a fee that was less than the roughly 25 percent of the value of a job that a broker typically received.

“We’re going to help you keep your truck full,” Mr. Lewis said. “We’re going to get you more work. People are always looking for their next load.”

Mr. Lewis said the company was operating in Oregon and Washington, and had thousands of truckers active in its network. He said companies that had used its service to ship goods included Scotts Miracle-Gro and a division of Nucor Steel. He said Convoy’s revenue had been doubling every month since the company began.

Investors were drawn to the company by the prospect that Convoy could collect a toll on a large industry. Local trucking, including transport of hazardous material, gravel and other specialized loads, is an $80 billion-a-year industry, by some estimates.

“Convoy has one of those unique chances to disrupt a big, old industry that hasn’t really changed much since it started,” said Mr. Rothman of Greylock, a venture capital firm that has invested in LinkedIn, Airbnb and other companies.

The challenge with any on-demand business, though, is getting buyers and sellers of services to use the system early on, when there is not much volume in the marketplace. And in the case of Convoy, it was not the first company to come up with an Uber-like idea for trucking.

A start-up called Cargomatic, founded several years ago, operates an on-demand trucking service in the San Francisco, Los Angeles and New York areas. Jonathan Kessler, the chief executive and co-founder of Cargomatic, which is based in Venice Beach, Calif., said the company had been used by thousands of drivers and shippers. Cargomatic has raised $17 million from investors.

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Mr. Partovi, who was an early investor in Facebook, said Convoy had the potential to be a large business because of the size of its market.

“Local trucking alone is a big enough market to build a Facebook-sized business,” he said.

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