Matt McKinney was a data science manager at Uber, where he helped launch Uber Freight alongside software engineer Shaosu Liu.
One of the main problems the couple saw there was that while they were able to increase the top line, they found it difficult to increase the bottom line by “losing a lot of money” due to bad debt and late payments.
As they dug into the cause, the two players realized that there was “a lot of complexity in the math of a shipment.”
For example, you find that all freight invoices have 20% errors. They found that on average it takes 50 days. To process and pay a single invoice.
“A lot of people in this business aren’t like Uber — they don’t have 250 engineers working on problems to figure it out,” McKinney explained. “So, for example, a Joe’s truck in Cincinnati, Ohio, would probably have the same billing and payment issues as an Uber load.”
Speaking to about three dozen shippers, carriers and brokers in the industry, McKinney and Liu heard the same thing: “It’s hard to get paid and it’s hard for us to pay.”
“So as an entrepreneur, when you hear that pain described word for word 35 times, you kind of know that the pain is your opportunity to build a product that doesn’t exist in the market,” he told TechCrunch. Interview
So the couple spent nights and weekends building prototypes LoopA startup that sits at the intersection of logistics and payments to focus full time on its business before leaving Uber in May 2021. They soon raised a $6 million seed round led by Sousa Ventures and 8VC. And then earlier this year they raised a $24 million Series A round led by Founders Fund. Neither funding was previously announced publicly.
During the survey, three of the 35 companies – unnamed large enterprises – told them that if they built a device to help solve the problem, they would test prototypes and become the first customers. Since then, the company has developed open APIs that “streamline data entry and shipping document creation.”
Specifically, the company uses natural language processing (NLP) and computer vision to digitize workflows and reconcile payments, and says the technology can “address the lack of standardization and extract information from a variety of document types and data sources to ensure billing accuracy, so invoices and payments can be cleared in real-time.” You can,” or b Real time, based on when the user wants to withdraw their money.
Loop’s own technology can reduce the delay between the time an invoice is received and paid from 50 days to 3 days, and goes as far as to say “nearly 0%” of invoicing errors.
The startup’s target customers are exporters that manufacture or distribute goods (think Walmart, Pepsi, Coca-Cola, and Nike). You can also work with brokers or 3PLs that arrange transactions between the truck driver and the shipper.
Loop launched its product offering in March and booked $25 million in gross payments in its first month. Today, it is doing more than $1 billion in total payment volume.
Image Credits: Loop
McKinney believes one of the tailwinds that helped LOP was the global shift from paper to electronic payment methods driven by the Covid pandemic. Also, geopolitical issues and the pandemic, which is exposing vulnerabilities in global supply chains, have caused freight costs to rise, meaning shippers are “looking for every way to cut costs,” he said. Loop’s goal is to help these companies cut costs and become more efficient. And, McKinney says, it could lower fees.
Loop earns money by taking a percentage of the total payment amount. It’s a fixed percentage based on the level, and as a company moves up the levels, the percentage you pay decreases. A consumption-based revenue model was important to the pair, McKinney told TechCrunch.
“If you’re getting value from the product, we want to adjust the incentives so you use it more,” he said. “And that’s how we should be paid.”
The company today has 35 employees and includes engineers from Uber, Google, Meta and Flexport. In fact, a software engineer from Flexport emailed Loop about a job. Peterson reached out to Flexport founder and then-CEO Ryan Peterson when he told them he was moving to the Loop.
“He said, ‘You just stole one of our No. 1 engineers,'” McKinney said. “I want to know what you’re doing and I want to invest.” He did so.
Also, Uber co-founders Garrett Camp, through the company’s firm, Expa, and Ryan Graves, through his family office, Saltwater Capital, who have shown no qualms about backing the company. And more than 10 of Loop 35’s employees come from Uber. Other investors include FourMore Capital, Lineage Ventures, Nichole Wischoff, 9Yards Capital, McVest Co, Mark Pincus and OEL Ventures.
“We’re simplifying logistics costs, but we’re generating data and that data and the quality of that data is what sets us apart from a lot of the competition,” McKinney said.
Founders Fund Chief John Luttig, who heads Loop Investments, told TechCrunch in an email that his firm was drawn to startups using a technology-first approach to eliminate friction for all parties in the supply chain because “competitors are simply throwing people at the problem.”
“As the domestic logistics renaissance continues and more companies look to reinvent American manufacturing, Loop technology will become even more valuable,” he said.
