Convoy, the freight startup based in Seattle that ceased its operations last week, is reportedly in the process of being acquired, as per information from a former employee of Convoy who is familiar with the ongoing deal.
The specifics of the acquisition are currently undisclosed, but it is anticipated to be concluded in the near future, as disclosed by the former employee who requested anonymity due to the deal not yet being finalized. According to this individual, the acquisition will involve a group of former Convoy employees, although the exact number participating in the new venture was not specified.
On October 24, the Washington state Employment Security Department reported that Convoy had to lay off 533 employees due to the closure, although it remains uncertain whether the potential acquisition will affect this figure.
Less than a week ago, the company declared the suspension of shipments, cessation of its operations, and the termination of employment for its workers. Convoy, a privately held firm that had secured substantial financial backing from notable tech figures such as Jeff Bezos and Bill Gates, seemed to have lost favor with some investors due to a decline in the freight business.
In a memo to the company’s employees last week, CEO Dan Lewis attributed the sudden collapse of the company, in part, to the broader industry’s decline, which reduced the demand for Convoy’s brokerage services. Lewis, an Amazon veteran who co-founded Convoy in 2015 with Grant Goodale, also indicated that this downturn had eroded the interest of potential buyers in the company.
In comments posted on LinkedIn over the weekend, Lewis mentioned that two potential deals to sell Convoy had progressed significantly but ultimately failed to materialize.
“There was no lack of interest in how the tech and biz worked,” Lewis said in the post, first reported by GeekWire. But the recent slump in freight volumes had cut into industry revenues, which had resulted in “weakening [of potential] suitors.”
Convoy positioned itself as a “digital freight network,” employing advanced software to establish direct connections between shippers and truckers, thereby circumventing the conventional brokerage system that historically managed a significant portion of scheduling in the industry.
This innovative approach garnered substantial support, with Convoy’s valuation reaching close to $4 billion by the previous year, as reported by GeekWire. According to the company’s LinkedIn page, it boasted a workforce of nearly 800 employees.
However, Convoy faced significant challenges due to the freight recession, a period marked by a decline in cargo volumes from the peak levels observed during the pandemic.
“You’re seeing a lot more competition in the space, which is crushing smaller companies,” Emily Nasseff Mitsch, an analyst at CFRA who covers trucking and rail, said last week.
