Investing in MVMNT

Freight is quite literally one of the backbones of the U.S. economy. Every year, shippers spend $800 billion dollars moving goods across the country, and as everyone learned firsthand over the past two years, one small hiccup—such as a stalled container ship—can exacerbate an already strained global supply chain. New consumer demands for increased visibility and shorter delivery times have only increased the strain on this already large and fragmented category. 

Despite its massive size, much of the freighting industry remains constrained by manual, inefficient processes that lead to valuable time lost and dollars overspent. Shippers collaborate with brokers, who in turn collaborate with carriers, and the majority of this process happens with Excel, paper and pencil, and a telephone. The freight market starts when a shipper (i.e., someone who manufactures, owns, or sells goods), wants to move some goods from point A to point B. To do so, the shipper needs a carrier, in this example a trucking company, to help move the goods. To handle this transaction, shippers typically turn to brokers, who search for availability, capacity, and pricing information from their network of carriers, as opposed to trying to search for carriers directly. Freight brokers, like insurance agents, real estate agents, and other traditional brokers, have remarkable staying power because freight is a relationship-driven business. The broker market is also highly fragmented; there are more than 17,000 freight brokers in the U.S., and one-third of the market is served by the 10 largest national brokers (which include C.H. Robinson and Coyote Logistics). The rest of the market goes through the long tail of freight brokers that are generally regionally focused. This model is supported by carriers who suffer from diseconomies of scale; carriers benefit from added fragmentation, as shippers’ inability to compare prices helps protect carriers’ margins.  

The process by which brokers find carriers to work with is also shockingly manual. The long tail of carriers, which make up a majority of the overall industry, feel this pain the most: only about 10% of trucking companies have over six trucks in their fleets. While there are some enterprise-focused products, small and medium-sized brokers lack the tools to manage their loads, determine which carriers to use, figure out those carriers’ availability and reliability, and locate where the carriers might be able to ship to. Brokers’ customers, the shippers, who also need to manage and track their loads, feel a similar pain point; they currently lack visibility across the brokers and carriers they work with to see where their goods are.

Given all of these issues, we think this market is ripe for software disruption. First, as outlined above, the freight market is enormous. Second, more than 60% of the freight brokerage market operates without software, and adoption is even lower for midmarket and SMBs. Historically, software has been sold mostly to enterprise companies, who are willing to pay higher prices, which helps make the unit economics work. These solutions, however, are overengineered and cost prohibitive for the small to midsize long tail of brokers. Third, there’s a clear opportunity to layer in financial services on top of the software. Fintech can help solve working capital issues, gaps in insurance coverage, and more, reflecting our Freemium OS thesis. 

Against this backdrop, we’re thrilled to announce our investment in MVMNT, the operating system for midmarket and small freight brokers and shippers. MVMNT is a transportation management system that ties together this fragmented industry through a simple interface to help brokers and shippers manage their freight loads and the carriers with whom they work. This is complemented by a suite of financial services products that enable shippers and carriers to operate more effectively. 

Any investment starts and ends with a team, and Michael Colin is one of the highest velocity and most tenacious founders we’ve backed. And he has lived the problem himself. He broke into the freight market working as a broker to help pay his way through college. As he solved problems in his brokerage’s back office, he realized there was an opportunity to help other brokerages—leading to the start of MVMNT. But what’s most amazing about Michael is his competitiveness and desire to win, which spans into his personal life as well. One of our favorite Michael facts is that he has consistently been one of the world’s highest-ranked World of Warcraft players, and the guild he ran has also been ranked in the world’s top five multiple times.

We couldn’t be more excited to back Michael and MVMNT on their journey to build a category-defining business in freight. 

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