Why it is price CargOn, a startup that went from BRL 390,000 to BRL 6.5 million in a single 12 months
Company founded in 2020 touches on a fundamental point for the industry and still little explored by technology companies in the sector: delivery supplier management
the startup CargOn it may be a name still unknown to the general public, but the size of the company’s growth in just three years is quite an incentive to devote some attention to it. Born in 2020, in the midst of a pandemic, the company earned BRL 394,000 in its first year of life, a figure that rose to BRL 6.5 million in the last year and should reach BRL 14 million in 2022. The accelerated increase is justified to the differentiated proposal in the market: to be a digital logistics operator for the industry, that is, taking care of the entire chain, from the moment a product has just been produced to the final delivery. In 2022 — after having gone through two rounds of funding that totaled BRL 5 million — the company opens a new round, now via equity crowdfunding, to raise another BRL 2.8 million.
“There are ‘N’ startups within this sector and ‘N’ companies within the same logistics chain, all unplugged. We make the connection between industries and all these service providers, so we are able to generate value. Our focus is entirely on the industry. Unlike a Loggi, for example, which wants to have capillarity, we take Loggi and ‘organize’ it for those who produce”, says Denny Mews, CEO and founder of the startup, to the EXAM IN. Today, the startup has 15 customers, more than BRL 1 billion in transacted freight and more than BRL 11 billion in transported goods. Among the customers are Shops Renner (in which CargOn bridges the gap between the work with Uello, a startup acquired by the retailer), ArcelorMittal, Atlas / Daco Stoves and Lafarge Holcing (one of the largest cement producers in the world).
Contrary to the stereotype of founders, “young geniuses” or recently graduated professionals, CargOn is the result of a study by those who know the market closely. Denny Mews, the startup’s CEO, worked for 20 years in the sector (17 of which were at Coopercarga, the company’s first investor in Santa Catarina) and saw up close the pains of the industry when dealing with carriers. He added this to his training in technology and began studying how to get the project off the ground in 2019. The following year, he put the business on its feet, even in the midst of the adversities generated by Covid-19.
“Many startups are only looking at the carrier’s vision. But, there is still a space to be explored. That’s because, as I like to say, ‘the pain of the industry is multiplied by the number of carriers that serve it’. She has five, ten, 100 transporters to make the business flow. Imagine having to prove delivery and control demand for each one of them? So, our vision was to understand that we would have to develop a platform capable of managing all of them, in a simple way”, says Mews.
How it works
Drawing an exact parallel with this type of service is not the simplest of tasks, but perhaps what comes closest, to give a dimension of the market to be explored, is that of PositionX and gives FreightBras, although they are more focused on just one of the ends that encompasses the work of CargOn. Last year, the outstanding companies came together in a ‘holding company’ that emerged with a contribution of US$ 200 million from Softbank and Tencent funds.
CargoX is dedicated to the supply of assets (trucks) for transport. CargOn manages these assets. The platform and services manage different carriers (whether ‘analog’ or digital, as is the case of the startup that received contributions from Softbank). “Our focus is management from the end of production, where the need for transportation begins, to the final delivery”, says Mews. In this process, a stage of it is fulfilled by the carriers.
Detailing CargOn’s work a little more, the startup developed its own platform with several APIs capable of connecting the systems of industries and carriers to CargOn’s to provide a unique view. They are very simple ‘bridges’ to be built, in which it is possible to plug in solutions such as SAP and Totvs, for example, and control the entire logistical flow. In the step by step, it includes from the end of production, when it is necessary to organize the dispatch, in addition to organizing the logistics suppliers, control of loads in real time, issuance of tax documentation, proof of delivery and, finally, a BI to analysis of the whole scenario of this supply chain. But that still wasn’t enough to grow.
There is a structural problem pointed out by Mews in relation to the other end, the ‘analog’ carrier systems. “They are archaic, complex, difficult to maintain and to customize”, he says. On the way to integrating the two ends, CargOn created a Carrier Portal. In it, carriers that have some difficulty with their own systems are able to manage the complete load, without worrying about integrations, customizations or modifications. In this way, according to the executive, it became much easier to manage carriers to serve the industry, simplifying and digitizing the entire process.
As a next step going forward, the startup wants to extend the reach of the transporter portal. If today it only manages to ensure that transport companies plug into the CargOn system, the plans for the future are to evolve it enough so that it, in itself, becomes a TMS (Transport Management System) of reference. for the sector. “We want to make this available in a simple way, including with a tax perspective. We are talking to some vendors to already connect the accounting to this system and the carrier does not need to have separate systems to do this. This is our view and the way we understand that it is possible to connect this chain more”, says Mews.
One factor contributing to CargOn’s growth is being agnostic about the type of industry it serves. Today, the company works with products ranging from steel to white goods. The company’s focus is mainly on medium to large industries, excluding multinationals — which are already able to create their own solutions to do what the company does. “But they are 2% of the total. There is a huge universe to be explored in the country”, says Mews.
In addition to expanding the reach of Portal do Transporter, CargOn is also studying, based on the new contribution, to structure a vertical of credit for transporters, who today have little access to this market. Another plan, with the new money, is to increase the commercial operation to bring in new customers.
The funding, by the way, will be done at EqSeed, a fintech that connects investors to startups and private companies for investments of up to BRL 15 million. The company, in fact, was the first authorized by the CVM to carry out startup investment rounds under instruction 588/2017.
As a differential in relation to other platforms, EqSeed points out that, from the base of 48 thousand investors, 60% of them are qualified (with investments above R$ 1 million). In addition, the rigor to take on startups is another important point. Today, less than 1% of companies that pass through the platform have their round approved. The company does everything from pre-seeding (investments from R$500,000, in the case of fintech) to the maximum limit established by the regulator, of R$15 million.
To circumvent the ‘winter’ of startups and draw attention to the company, the founder joins this data to what he calls balance CargOn’s financial The company still reinvests all the profit it has in growth, but its discourse is in line with what investors are looking for at a time of high interest rates and smaller pockets: to be a sustainable business model.
The Logtech market
CargOn is yet another example of a list of companies in a booming sector. It is still not possible to accurately trace the effects of the pandemic on startups in this niche, but some data from 2020 from the Distrito platform help to elucidate the role that logtechs play in the Brazilian market.
According to the Logitech District Report, this is a super new market. Of the 283 companies identified in the sector that year, half had up to five years of life. Still, they’ve already dragged a billion-dollar investment for themselves. From 2011 to 2020, US$ 1.3 billion was invested in startups in the sector in Brazil, in 100 investment rounds.
The value mainly considers the contributions made to iFood (US$ 591.9 million), Loggi (US$ 295 million) and CargoX (US$ 177.8 million). In 2020 alone, the most recent data, there were US$ 187.6 million in investment — and, excluding the three mentioned above, the District shows constant growth in investments in the sector since 2017.
Among the sub-sectors into which they are divided, the Logistics Management category is the one that concentrates the largest number of companies, with 131 startups of this type. Delivery solutions represent 20% of logtechs, followed by reverse logistics (12%), product inventory (11.3%) and intermediation between suppliers and carriers (11%) — the latter being the main approach niche with CargOn.
The mapping of the top 10 in the sector, described in the report, helps to support Mews’ speech about the sector. Among them (Ifood, Loggi, Mandaê, CliqueRetire, VeículoBras, DeliveryCenter, Cargo X, Modern Logistics, Cobli and Truckpad) most are focused on the unitary point of picking up loads and delivering them, but few — if not none — are focused on managing other startups that are doing this type of service.
The watchful eye helps CargOn to remain relevant in an increasingly competitive market. By closely understanding one of the main pains of the sector, the company’s goal is to become a national reference in this type of service. Leaving the era of the ‘analog’ logistics operator behind and being able to do everything from the separation of the load to the final delivery in a digital way – without any kind of contact by phone, for example – is the word that the company wants to spread, towards the market national.