Denim, the freight and logistics fintech platform formerly known as Axle Payments, today announced that it has raised $126 million in a Series B funding round led by Pelion Venture Partners with participation from Crosslink Capital, Anthemis, Trucks VC, FJ Labs, Tribeca Early Stage Partners and Refashiond Ventures at a “nine-figure” valuation. CEO and co-founder Bharath Krishnamoorthy tells businesskinda.com the new money, a combination of equity ($26 million) and debt ($100 million), will be used to scale the company and provide working capital to Denim’s customers .
Krishnamoorthy and Denim’s other co-founder Shawn Vo had been friends for 16 years before launching the company. Vo was in the credit risk department at Barclays and a full-stack developer at Fintria, a fintech firm, while Krishnamoorthy was an associate at several law firms, including Gibson, Dunn & Crutcher.
“We witnessed a significant gap in the freight brokerage market, where legacy systems – i.e. paper checks, physical filing – were still in place, and developed an intuitive payment technology to streamline broker operations and maintain the best courier relationships through the platform,” Krishnamoorthy told businesskinda.com via email.
To that end, Denim provides financial products, operational tools and automated workflows for freight brokers – the intermediaries between shippers and carriers. The company handles invoicing, collections and payments to brokers, as well as access to debt financing.
“The industry has shown reluctance to abandon its old processes – many shippers still pay freight agents on 30-60 day installments, despite carriers expecting near-instant payments. These longer time frames can cause cash flow problems,” Krishnamoorthy added.
Denim uses algorithms to reduce the amount of time the operations team spends evaluating the risk of invoices it buys from brokers. For each shipment, these algorithms review 20 different data points and either approve the purchase or indicate that a manual review is required.
In addition, the Denim platform integrates with accounting software such as QuickBooks, allowing brokers to share data between various existing systems. From a dashboard, users can see statistics such as pending or completed tasks, total amounts billed, the most used carriers and the fastest paying customers.
“This combination of automation, financial stability and accurate reporting makes it possible freight brokers and their partners to navigate volatile shifts in the economy. And most importantly, it keeps the entire supply chain moving in the right direction,” continues Krishnamoorthy. “In our current economic environment, companies cannot afford to ignore back-end risks and slow processes.”
Denim competes with other fintech companies in the space, including TriumphPay, HaulPay and OTR Capital. Curiously, Krishnamoorthy declined to say how many customers the company currently has or where its revenue stands. But he did offer that since its launch three years ago, Denim has connected more than 7,000 freight brokers, shippers and carriers.
“Despite the delay, Denim is in a unique position to further scale its platform and workforce. We’ve built a financial model based on a sound unit economy,” Krishnamoorthy said. “We are bringing new solutions to the market to enable freight agents to operate seamlessly at full capacity and adapt to changes in the supply chain. And we hire talent that aligns not only with our business goals, but also with our core values.”
Denim has 100 full-time employees and plans to have 120 by the end of the year, funded in part by the new equity. To date, the startup has raised a total of $165 million.
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