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Invest in Flexport
Flexport platform lets businesses manage shipments around the world. The company is a licensed customs brokerage and freight forwarder built around a web application.
In 2021, Flexport was ranked 41st on CNBC's Disruptor 50 list. The company was previously included in this list in 2019. Since its foundation in 2013, Flexport has grown to 2,000 employees. The company has opened 23 offices and warehouses in the U.S., the Netherlands, Denmark, Germany, China and Hong Kong. Flexport serves more than 10,000 customers, including Sonos, Klean Kanteen and Timbuk2, in more than 112 countries.
The Freight Trucking market in the U.S. is estimated at $514 billion in the year 2021. The country accounts for 24% share in the global market, which is projected to reach $2.7 trillion by 2026, growing at a CAGR of 4.7%.
The industry showed its vulnerability during the Covid-19 crisis and now transport companies are actively implementing digital solutions to increase their efficiency. The Digital Freight Forwarding Market is expected to grow at a CAGR of around 25% during the next few years.
Flexport is a leader in this market and claims that its business won during the tariff war and the Covid-19 crisis due to the more efficient use of data compared to major competitors.
Flexport's active user base is growing, with its customer base up 55% in Q3 2020 compared to Q3 a year earlier.
The company's operations are directly related to the global economic situation. Disruptions in supply chains between countries and regions will result in lower freight volumes, negatively impacting Flexport's operating performance. The escalation of the US-China trade war will negatively affect the company's business, which will also affect the share price.
The Digital Freight Forwarding Market is competitive and is highly fragmented with presence of many players – Twill, FreightHub, Fleet, Convoy, InstaFreight, Transporteca, Kontainers, KN Freight Net, Turvo, iContainers, DHL Group, Kuehne+Nagel International AG and Agility Logistics Pvt.
Flexport's revenue has shown steady annual growth. In 2019, the company earned $670 million, and in 2020, revenue nearly doubled to $1.3 billion. In 2021, it grew 150% to $3.3 billion ( about 80% of the revenue is channelled straight to Flexport's shipping partners). Also in 2021, Flexport posted its first net profit of $37 million.
Its last funding round in February 2022 valued the company at $8 billion, which is 2.5 x more than its last valuation in April 2019. Then Flexport was valued at $3.2 billion, the share price was $6.89. Flexport has raised a total of $2.3 billion from well-known institutional investors such as Peter Thiel’s Founder Fund (invested in Facebook, PayPal, SpaceX), Yuri Milner’s DST Global (invested in Facebook, Twitter, Alibaba), Y Combinator (invested in Twitch, Reddit, Dropbox) and others.
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Venture investing is very risky as they involve new or growing companies, and multifold increase in capitalization is expected. We prioritize companies at the pre-IPO stage as they already demonstrate strong financial indicators and plan to go public soon. This approach allows limiting hyper-risks related to insolvency of new companies and substantially increasing profits as compared to investors who buy shares through a subscription just before the IPO.
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United Traders is experienced in minimizing risks but a future investor should be aware of all risk types:
- Illiquidity. There is a possibility that early exit from this investment will take more than 1 month.
- Asymmetric information. Management and current investors have access to more internal information about the company than other market participants.
- Time uncertainty. There is no information regarding next financing round or exit strategy timeframe (IPO or M&A).
- Share dilution. The issue of additional shares by a company may reduce the value of shares of existing investors.