Trucking startup BlackBuck raises $150 million, led by Goldman Sachs, Accel

Zinka Logistics Solutions, which operates BlackBuck, an online marketplace for trucking, has closed a $150 million (Rs 1,050 crore) round of equity funding in an investment led by Goldman Sachs Investment Partners and Silicon Valley-based Accel, the company said in a statement on May 1.

Bengaluru-based BlackBuck will use the money to expand its operations and invest heavily in product and data science capabilities. Other new investors who participated are Wellington, Sequoia Capital, B Capital and LightStreet. The round also saw participation from existing investors Sands Capital and International Finance Corporation, the investment arm of the World Bank. This takes the total amount of funds raised by BlackBuck to over $230 million, the company said in its release.

Startups such as BlackBuck, Porter, Rivigo and LetsTransport are changing the trucking scene in India by using technology to organise the highly fragmented business, where a bulk of the trucks belong to small fleet owners. Online, real-time matching of shippers and truckers and the transparency the process offers has the potential to lower costs significantly and boost volumes, helping everyone make more money in a more sustainable way too.

“We see enormous potential for innovation in the full truck load logistics market in India,” Sami Ahmad, head of Asia for Goldman Sachs Investment Partners Venture Capital & Growth Equity team, said in BlackBuck’s statement. “Currently, the market is fragmented and inefficient due to highly manual and opaque processes, leading to poor experiences for stakeholders across the value chain. We believe that with its technology-enabled approach to logistics and associated services, Blackbuck is well positioned to better serve the needs of shippers, fleet owners, and truck drivers.”

Founded in 2015, BlackBuck today has more than 300,000 trucks and 60,000 fleet owners on its platform. It operates in a market that has traditionally been served by tens of thousands of unorganised intermediaries, known as transporters and brokers. The market is highly fragmented on both the shippers’ and truckers’ side, and fraught with inefficiencies. According to BlackBuck’s statement, 80 percent of inter-city fleets is owned by players with less than five trucks.

“Truck supply in India is highly fragmented, and only a select few own large fleets,” said Nikhil Kumar, engagement manager at Redseer Consulting, who has advised funds on their investments in this sector. Given the small owners’ limited scale and managerial bandwidth, they are often at the mercy of brokers/agents who bring them business, and pocket a significant commission. On the other hand, small and medium-size enterprises who have irregular shipments are unable to reach out to the end-service provider due to the size of their operations, Kumar said.

“Online truck aggregators like BlackBuck and Rivigo have challenged this status-quo. They have addressed the root problems by eliminating the myriad set of intermediaries involved,” Kumar added in an email to Forbes India. Additional services such as GPS tracking, insurance and financing, vehicle maintenance and driver facilities all add to the monetisation opportunity in the sector. “We are positive of the growth opportunity in the sector.”

Today, a long-haul truck in India has 12 to 17 billable days and spends the remaining time in loading/ unloading, maintenance, waiting for loads or doing sub-optimal loads, wrote Aditi Gupta, vice president at Stellaris Venture Partners, in a May 2018 blogpost on opportunities in India’s long-haul trucking sector. In the process, an average truck driver takes home anywhere between Rs 20,000 and Rs 30,000 after working 16 hours a day in very unpredictable and harsh working conditions. An optimised network with 20 to 24 days of utilisation can help push up the revenue of these vehicles by about 40 percent to 60 percent, and will at least double the income of the driver cum owners, Gupta wrote.

BlackBuck uses technology to match a trucker with a shipper real-time, enabling transparency, higher truck utilisation, better shipper services levels and efficient pricing. It also facilitates services around trucking, by providing fleet cards, tyres, Internet of Things (IoT) devices, insurance and working capital credit to truckers.

Fleet owners on the BlackBuck platform have been able to reduce idle time by 45 percent, leading to an increase in earnings between 20 percent and 30 percent. For all the shippers on the BlackBuck platform, the price transparency has led to savings of 5 percent to 15 percent per shipment. The ability to fulfil orders is currently at more than 95 percent, BlackBuck says. The ability to locate the right freight partners across the country through the BlackBuck app, and real-time visibility of the progress of shipments till the last mile, has resulted in significant improvement in business metrics.

As part of this investment round, the employees at BlackBuck have access to liquidating 25 percent of their total vested stocks, at the current stock price of the company. BlackBuck didn’t reveal its post-funding value, but it may not be too far from being valued at $1 billion according to a report in the Economic Times.

Rajesh Yabaji, CEO and co-Founder of BlackBuck, said, “Long haul road transportation is a $150 billion industry for India. With this round of financing, we will invest to deepen our presence across the national market. Significant investments will be made into product development and data sciences, both these dimensions are core to BlackBuck’s marketplace approach.”