What you need to know about a 2021 Flexport IPO


Flexport International, LLC considers itself ‘the OS of global trade’. The company is a global freight forwarder and modern logistics platform whose goal is to fix and improve user experience in global trade. Its software platform makes it easy for its clients to engage in trade globally. Freight forwarding means all of the coordination of shipping, packaging, loading and hand-offs to make it so that containers of goods in one location, get to another location via trucks, boats and planes – even to retailers on the other side of the world. It was founded in 2013 and is rumored to be exploring an IPO. 

TL;DR

  • Founded in 2013 by Ryan Petersen and Susanne Schöneberg
  • Flexport was founded to modernize and fix the freight industry. 
  • They have raised a total of $1.3 billion from many investors including Softbank, Founders Fund, DST Global, Cherubic Ventures, Susa Ventures and SF Expresslead 
  • Flexport’s Revenue Run Rate has shown consistent growth from approximately $30 million in 2014 to $1.7 billion in 2020. 
  • Flexport hasn’t been in any legal or ethical trouble but they did file a lawsuit against Western Global Airlines (WGA) for failing to provide service due to a long string of mechanical failures and delayed aircraft repairs, disrupting Flexport’s business.
  • They haven’t officially begun the IPO process. Their most recent valuation was $3.2 billion.

Flexport at a glance

The founders of Flexport are Ryan Petersen and Susanne Schöneberg. Petersen remains as CEO and Schöneberg is now the founder and leader of Flexport’s impact arm, Flexport.org. Flexport.org is a social good and sustainability initiative that partners with nonprofits shipping goods to areas of need, companies with excess goods to donate and companies that are looking for innovative ways to reduce carbon emissions. Petersen has a bachelor’s degree in economics from University of California, Berkeley and received his MBA from Columbia University. Schöneberg has a bachelor’s degree in economics from Humboldt University of Berlin and an MBA from University of California, Berkeley. 

Prior to starting Flexport, Petersen founded and led a data-as-service company supporting global shipping for businesses called ImportGenius.com with his brother. He comes from an entrepreneurial family; his mother was a biochemist and his father was a computer programmer – together they ran a food safety business. Prior to founding Flexport, Schöneberg had transportation and logistics experience and was the Founder and leader of the Next Generation Think Tank. 

The starting goal of Flexport was to fix the user experience in global trade. They started with an undisclosed amount of funding in a seed round from Initialized Capital. In 2013, when the company was founded, the freight industry largely functioned still via paper and faxes. Cumbersome, prone to error and lacking transparency for companies trying to include freight forwarding costs in their planning, Flexport sought to modernize and simplify the process. Within three years, Flexport had over 700 clients across 64 countries. By 2018, Flexport added additional vertical integrations by adding freight financing, chartering its own planes, and operating its own warehouses. According to the WTO, over 80% of global trade utilizes freight financing so this was an important addition for the company. Today they have 10,000 clients in 200 countries. 

The company has received many awards. In 2018 they were recognized on the following lists: 

  • Business Insider’s Top 51 Enterprise Startups to Bet Your Career On
  • Lloyd’s Loading List’s Freight Forwarder of the Year
  • #8 on Inc. 5000, a list of the fastest-growing private companies in the U.S
  • #13 on LinkedIn’s Top Startups
  • Inc.’s Best Companies to Work For
  • 8th fastest growing company in the USA with a three year growth of 15911%

In 2019 they were recognized on the following lists: 

  • Breakout List’s Great Companies to Apply For
  • Global Cleantech 100
  • 2019 CNBC Disruptor 50
  • Inc.’s Best Workplaces

Flexport’s guiding principles have been consistently employed from the beginning. Petersen uses two major frameworks in order to maintain company culture and prioritize customer needs. He bases his philosophies regarding prioritizing customer needs on principles he learned from his mentor Charlie Munger. The basis of this belief is that if you don’t prioritize your customers, your business will not be sustainable. There are six layers to how he evaluates whether he is successfully prioritizing and meeting clients’ needs: 

  • Clients: Flexport serves and earns money from both importers and exporters
  • Vendors: Flexport pays to partner with those who own the planes, ships, and trucks
  • Employees: Flexport aims to create a win-win situation for employees. 
  • Investors: Flexport works to earn a return on investment for their investors.
  • Regulators: Flexport applies for and maintains licensure through regulatory bodies. For Flexport, there are 43 regulators in just the US who take an interest in imported products, and there are additional ones across the globe. 
  • Communities: Where Flexport operates.

Petersen is proud of Flexport’s company culture and has worked hard to keep that culture intact even as it grows to keep pace with demand. He created his own list of six questions to help him stay on track: 

  • Why?: Why do you exist? (purpose, mission, vision, and impact)
  • Who?: What values and behaviors do you look for in employees you hire?
  • What?: What metrics do you use to measure success and maintain focus?
  • How?: How do decisions get made and how do you improve quickly?
  • When?: When should you execute tasks that satisfy customer needs?
  • Where?: Where does your team feel a sense of belonging and inclusivity?

Two other guiding characteristics are discipline and accountability. He utilizes the OKRs system created by Intel’s Andy Grove and most famously used by Amazon. According to the website, the Flexport vision includes ‘building the first Operating System for Global Trade, a strategic operating model that combines technology and analytics, logistics infrastructure, and hands-on supply chain expertise’.

Flexport’s revenue run rate has shown consistent growth from approximately $30 million in 2014 to $1.7 billion in 2020. It hasn’t stalled; but they were affected by the global pandemic in the sense that their business was affected by shortages of consumer goods and increased demand for shipping. They have adapted and grown through the pandemic. As a private company, many financial details are private; however the company states they are profitable. 

Via it’s impact arm, Flexport.org, the company supports mission-focused and ecological sustainability work. During the global COVID-19 pandemic, they were one of 10 organizations that contributed to creating the Frontline Responder’s Fund. The Frontline Responder’s Fund raised over $8 million and used it to engage in direct relief efforts including delivering more than 54 million units of masks, food supplies, medical supplies and medical equipment like oxygen concentrators across five continents. They utilize Flexport’s proprietary modern technology system to help them route supplies to wherever they are most needed in the world. Additionally, Petersen wrote a guide for other companies to help resolve some of the bottlenecks in delivering coronavirus supplies and published it for anyone’s use. 

Flexport fundraising to know about

According to Crunchbase, Flexport has raised a total of $1.3 billion in 4 rounds of funding. Here’s the breakdown of financing over the years: 

  • Seed Round: February 2014, undisclosed amount, Initialized Capital
  • Convertible Note: June 2014, undisclosed amount, AceCap
  • Series A: August 2015, $28.8 million, Founders Fund, $102.5 million valuation
  • Series B: September 2016, $65 million, Founders Fund, $320.1 million valuation
  • Series C: September 2017, $110 million, DST Global, $953.3 million valuation
  • Corporate Round: April 2018, $100 million, SF Express
  • Series D: February 2019, $1 billion, Softbank Vision Fund, $3.2 billion valuation
  • Venture Round: March 2019, undisclosed amount, Rancilio Cube, $3.2 billion valuation
  • Secondary Market: December 2019, undisclosed amount, Jovono and Manhattan Venture Partners, $3.2 billion valuation

They have acquired two businesses:

  • August 2018 acquired Fieldbook for $1.5 million. 
  • October 2019 acquired Crux Systems for an undisclosed amount. 

They have invested in five businesses: 

  • January 2018 invested in the Seed round of Elliot
  • April 2021 invested in the Series B round of Routable
  • May 2021 invested in the pre-Seed round of Flextock
  • May 2021 invested in the Series A round of Axle
  • June 2021 invested in the Series A round of Tajir

They have one sub-organization:

  • In August 2018, they started Transmission LLC which provides ELD and GPS technology specific to managing a trucking fleet. 

Path to the Flexport IPO 

Flexport reached unicorn status in 2019 with a $3.2 billion valuation. As recently as 2020, Flexport did not seem to be exploring an IPO. In fact, in April 2020, CEO Petersen was quoted in a TechCrunch article as saying, “I’m just having fun. You have a purpose. You get invited to interesting things. Once you sell your business, you’re just another rich guy. I never want to sell the business.” One of the benefits of an IPO; however, is a large infusion of capital that can fund expansion of services, infrastructure or both. Analysts are unclear as to whether the only path towards continuing its successful growth would be an IPO for Flexport. 

Related: You can learn more about IPOs here.

When is the Flexport IPO date? 

Flexport has not yet filed for an IPO. Nor have they officially released any statement indicating they are exploring one. Flexport currently has four leading investors: Founders Fund of San Francisco, CA; Softbank Vision Fund of London, England; DST Global of Hong Kong Island, Hong Kong; and SF Express of Jilin, China. 

What investors should know about the Flexport IPO 

If they do end up exploring an IPO in the near future, investors should know all investments have risks. Let’s explore what type of risks investors might need to consider with a Flexport IPO. Two major ones are regulators and vendors. In the US alone, Flexport has to deal with 43 different trade regulators. It works with at least 20 more across the globe.  As it navigates all of these different regulatory bodies, there is the risk that they will struggle to maintain compliance as the complexity of the business increases. Another challenge is Flexport uses other company’s transportation modes such as planes, trucks and ships. If a vendor has poor performance or a disaster, this will affect Flexport’s ability to deliver on its promises to its own clients. This has happened in the past when they had a four year contract with Western Global Airlines that was beset with multiple mechanical failures and repair delays. Ultimately Flexport sued WGA and ended the contract. 

While there are risks for the company, overall the freight forwarding industry globally is experiencing increased demand. The Vice President of Global Ocean at Flexport, Nerijus Poskus, was quoted in May 2021 by FreightWaves.com as saying the volume of global freight business is at 1.5 pre-pandemic levels. He notes the increase is due not just to increased current demand, but also by retailers re-stocking to be prepared for future demand. Even when importers are willing to pay a premium for a specific spot on a boat on a certain day, capacity has been so limited that no amount of premium payments are sufficient because the existing contracted space is the entire capacity of the transporter ships. Poskus predicts this will continue for at least the next two quarters and industry analysts agree. 

Flexport states they have a market advantage in terms of their capacity to manage and understand the data, in allocation management, and their prediction and booking ability. In 2020 at the Alcott Global Virtual Supply Chain Summit, Flexport’s COO Sanne Manders, said the reason they were able to capitalize on the trade wars and COVID-19 crises in 2020 was because they are a smaller organization built on modern technology and therefore they were able to quickly pivot. He said, “When it went from a Tweet to a tariff, as policy is implemented these days, we were able to engage with our clients within hours. We let them understand what the consequences were for their portfolio of products. Conversely – it tooks days before they heard from competitors if at all. On the ocean side, we’ve always spent a lot of time on allocation management, and predicting and booking reliably with the carrier. It’s pretty common to book 130% and you cancel 30%, so it’s very hard for carriers to manage. When there’s a lot of overcapacity, it’s not an issue. But when there’s peak season, or an artificial peak as we’re seeing right now, suddenly allocation management becomes extremely important.”

Flexport’s biggest competitors are: Telenet Global Logistics, a private travel and leisure company; Bremer Lagerhaus, a publicly traded travel and leisure company; Global Tranz, a travel and leisure company that is a subsidiary of another company; and Echo Global Logistics, a publicly traded tech company. But truthfully, Flexport competes with multiple freight forwarding companies that exist in online marketplaces that focus on winning the price war. Flexport’s goals go beyond having the lowest price; they want to provide the best software and systems to help clients book, track and pay for shipments. This means they aim to compete with the big names of DHL, FedEx and UPS. 

Bottom line

Flexport navigated the global pandemic well and is poised to benefit from the current industry demands for freight forwarding and future predicted trends towards increases.  While no one is exempt from risk, if Flexport continues to develop an operating system that assists its clients with solving all of the freight forwarding problems, there is a potential for gain. 

Julie Pierce Onos is a Massachusetts-based writer and Organization Development expert. She loves the stories that numbers tell us about business, relationships and health. You can connect with her on Twitter at @juliepierceonos.

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