Xeneta makes a splash with $80M on a $265M valuation to scale its crowdsourced sea and air freight analytics • ProWellTech

The wheels of global commerce continue to turn, through wars, pandemics and economic downturns; and today a startup taking a new tech approach to improve the workings of one of the more antiquated aspects of that industry — shipping — is announcing a big round of funding to double down on growth.

Xeneta — a startup out of Oslo, Norway, that applies innovations in crowdsourcing to the fragmented and often murky world of shipping to build transparent data and analytics for the industry — has raised $80 million, money that it will be using to build out its datasets and customers across more global routes.

Xeneta has already amassed 300 million data points from “several hundred” of the world’s biggest shipping companies, which contribute and subsequently source source data from the Xeneta platform to figure out if they are paying market prices for their shipping on particular routes. And more than $40 billion in procurement sitting on the platform to date. This is all just the tip of the iceberg, however: Patrik Berglund, Xeneta’s CEO and co-founder, said in an interview with ProWellTech that combined procurement across air and sea (the two channels Xeneta covers today) totals between $600 million and $900 million depending on the season; and there are thousands more shipping companies and other shipping players out there.

“We believe we will have 1,000 of them on Xeneta in the near future,” he said. It has aimed for the biggest first: current customers include Electrolux, Unilever, Nestle, Zebra Technologies, Thyssenkrupp, Volvo, General Mills, Procter & Gamble, and John Deere.

The funding values Xeneta at $265 million, the company has confirmed.

Apax Digital, the growth equity arm of PE firm Apax, is leading the round, with Lugard Road Capital also participating. Lugard is an affiliate of a previous backer of the company, Luxor, and other existing investors include Creandum, Point Nine and Smedvig. Prior to this round, the company had raised around $55 million over a series of rounds starting in 2013.

Innovations in e-commerce and fintech have sped up how the world finds and pays for goods and services, but when it comes to getting items from A to B to turn the wheels of that ecosystem, the journey is a little less zippy: shipping remains a fragmented and — subject to economic, climate and social changes — often unpredictable ecosystem.

There have been a number of tech startups emerging over the last several years targeting opportunities to bring more modern approaches to the antiquated and un-streamlined world of shipping. PayCargo is building new payment products; companies like sennder, Zencargo and Flexport have zeroed in on freight forwarding; Flock Freight is applying a carpooling ethos to trucking; Convoy is also applying a new touch to logistics; Fleetzero believes there’s mileage in electric freight ships; and so on.

Xeneta is in yet another distinct category of freight and shipping services: business intelligence for the companies working within the industry.

As Berglund explained it, it’s a somewhat ranging and unstructured market: for starters, you have thousands of small and big shipping companies and the partners they use to carry out their work, as well as hundreds of thousands of businesses using those services. Added to that, those interactions are often analogue and impacted by a multitude of factors that can affect pricing and overall operations. Those who are looking to book a shipping job might not know what the going price might be for a particular route, or whether it can be approached in a different way more cheaply. Those with space on freighters don’t know the best prices to offer potential customers.

Xeneta’s breakthrough was to build a platform where all of those players could essentially share what prices they are paying at any given moment for a particular route. Its system then orders that data and applies analytics around it to model how pricing is moving, and what it might mean for related routes elsewhere.

As with other crowdsourced logistics platforms (Waze is an apt example here), the more data that is fed into the system, the more powerful it becomes. Today, Xeneta has most definitely crossed over into the self-feeding category in that regard, although earlier years when the company was just starting out were definitely more challenging.

Initially, the company covered just one route — from a port in Norway to a port China. But getting its first customers to make the leap to provide data for that one passage to prove Xeneta’s value turned out to be a winner: Berglund said that things quickly picked up as those customers input more data, and others started to as well, in order to get better insights into how much they were paying, what routes they were using and so on. The data now is based on a 70/30 split between sea and air shipping (it doesn’t cover ground routes at this point) and the data feed is active enough that when you visit Xeneta’s site, you see it passing ticker-style as it gets updated, more like a stock exchange. Interestingly, it seems that those who are submitting data are less concerned about the competitive aspect of divulging their own data to would-be rivals: the value gained from knowing the bigger picture seems to outweigh this fact.

The company, interestingly, isn’t in the business of booking shipping routes, nor does it want to be, Berglund said.

“My background is in freight forwarding,” he said, and so he knows the benefit of being someone that can provide that group with more data to do the job better. “Whether its a new digital freight forwarder, or a legacy player, they are all in need of better data to run their businesses more efficiently.” He added that 95% of the market still mainly uses Excel spreadsheets to parse historical and current data.

“I’m just flabbergasted that they still use that, and fax machines.”

And just to be clear, it’s not the only one that has realized the potential of offering more intelligence tools to this eventually modernizing industry. Others like Freightview are also building tools to make it easier for those booking shipping to get a sense of market pricing.

“Buyers and sellers of freight have been flying blind in a complex and opaque market. Xeneta’s world-leading dataset and cutting-edge platform provide unique access to granular real-time information and insight, enabling data-driven freight sales and purchases,” said Mark Beith, a partner at Apax Digital, in a statement. “This delivers compelling value for their blue-chip customer base – not just in sales or procurement, but also in budgeting and reporting, and increasingly in ESG monitoring. We’re thrilled to partner with Patrik and the Xeneta team and help deliver their vision.” Beith is joining Xeneta’s board with this round.