Denim Drives Freight Financing Platform Forward With $27.7M

Denim received a $27.7 million boost of debt and equity financing to advance its platform that manages cash flow for freight brokers.

Anthemis and Techstars participated in the round that includes $2.7 million in equity and $25 million in debt financing. This brings the New York-based company’s total amount raised since its inception in 2017 to $29.1 million, according to Crunchbase data. In January, Denim raised a $1.4 million pre-seed round, led by Trucks Venture Capital.

Co-founders Bharath Krishnamoorthy and Shawn Vo had the idea for Dafter learning how crucial cash flow is to small businesses–of which many freight forwarders are–while building a transportation tech company together.

Freight brokers earn a commission by securing transportation for goods that need to be moved. In the past, brokers were paid 30 or 40 days later by the customers who needed to ship their goods, at which time they would pay the transportation company. What changed was bigger companies entering the space, promising what they call “quick pay,” sometimes the next day, Krishnamoorthy, CEO, told Crunchbase News.

“Many of the brokers may only have revenue of $10 million or $12 million, so they are not sitting on a large portion of money they can lend out,” he added. “We help bridge that gap and take over all of that for them so they can focus on their business.”

Denim’s proprietary software-based service provides freight brokers and forwarders with that affordable working capital and back-office automation, as well as gives them their own “QuickPay” service to offer to their trucking company vendors.

In terms of where Denim will use the new funding, the debt portion will provide the financing and opportunity to scale operations to additional markets, while the equity will be invested in product development, Krishnamoorthy said.

Although the company was founded in 2017, Krishnamoorthy and Vo did not begin working on the concept until last year. Over the past 12 months, Denim has processed millions of dollars in invoices and continues to grow 40 percent month-over-month, Krishnamoorthy said.

Its business nearly tripled since April, buoyed by brokers who needed help as the global pandemic grew worse.

“Brokers get hit on two fronts: During the recession, their volumes fall when they aren’t getting paid by customers, but they also get hit on the upswing when they are doing more volume but are only working with the smaller amount of payables,” Krishnamoorthy added. “It’s likely that this cash flow problem will grow as the year progresses.”

Meanwhile, Ruth Foxe-Blader, partner at Anthemis, said via email that Denim was attractive due to its vision of supporting small and medium-sized businesses with financial products and risk management tools.

“COVID-19 has made this company even more relevant for a number of reasons: road freight is increasingly important, and small carriers will rely on Denim’s QuickPay solution in order to ensure smooth cash flows, enabling them to continue operating despite fluctuations in demand,” she added. “Denim's technology stack is second-to-none, with critical product releases shipping regularly in order to enable seamless integration for freight intermediaries of any size.”

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