Why We Invested in Cargado, the Software Stack Connecting U.S. and Mexico Supply Chains

At its core, our supply chain thesis is to invest in technology that helps the world build more durable supply chains. To us, a durable supply chain is one that is less susceptible to shocks. The shocks we’ve seen over the past four years – a global pandemic, a war, a blocked canal, etc – have shown us that the U.S. has too much exposure to geographic risk in its supply chains. As a reaction to that, nearshoring has become one of, if not the most talked about trend in supply chain durability.

Nearshoring is happening and it’s happening fast. The U.S. and Mexico are at an inflection point. Nearshoring trends and steep declines in business with China have made Mexico America’s top trading partner, with 80% of its exports headed our way. The problem: How they get here.

Orchestrating cross border freight is messy and manual today. For U.S. domestic transportation, logistics companies (freight brokers) that do this orchestration have marketplace tools where they can post job opportunities (loads) and find trucking companies (carriers) to haul them. They have other tools that help them price shipping lanes, vet carriers and onboard them. No part of that “freight broker procurement stack” exists for cross border operations. Without the same tooling, brokers are forced to use Whatsapp and Facebook to find carriers and manage operations. They take on 60-80% more operating costs moving cross border loads than domestic loads, and reject cross border volume from their customer because they lack the resources to service it. As more manufacturing moves to Mexico, shippers and brokers alike are feeling the pressure for this system to professionalize.

Because of that, we’re excited to announce our lead investment in Cargado’s $6.8M seed round, with participation from Ironspring Ventures, Zenda Capital, Wischoff Ventures, and Proeza Ventures, along with new investor and strategic partner RyderVentures. Led by Cofounders and deep logistics tech veterans Matt Silver and Rylan Hawkins, this software stack is helping American freight brokers and shippers procure Mexican trucking services and execute cross border freight.

Cargado’s solution for a fast changing LATAM

Cargado’s goal is to become the single source of truth for all Mexican logistics data. Cross-border freight poses so many challenges for all the providers in the process to manage it properly. With all the cross-border shipment information and data moving through WhatsApp and email, there’s an enormous opportunity to create a better structure from coverage to operations to the customs process to pricing and payments.

These opportunities represent a combination of long and fast evolving conditions that have left a gaping hole in a huge market. As our friends at Ironspring summarized in a post last summer, the confluence of increased nearshoring driven by the pandemic, increased geopolitical tensions, higher interest rates strengthening the Peso, LATAM’s population gaining wider access to the internet, and government and regulatory groups pushing tech-friendly policies has spurred a wave of new companies across many supply chain categories.

We think Matt and Rylan are the team that stands to win in this category. Matt led the Coyote Mexico product during his 12-year tenure at Coyote Logistics, and in 2018 started Forager, a venture-backed digital freight brokerage focused on cross-border freight. It was acquired by Arrive Logistics in January 2022, and he went on to lead Arrive’s Mexico business.

Rylan spent time at Microsoft and then Convoy, where he led Convoy for Brokers and Convoy Go. He brought three engineers with him to Cargado and they immediately got to work in building out a platform that we believe will create a more seamless experience for everyone involved in freight moving between the U.S. and Mexico. If customer and partner response in recent weeks is any indication, this is going to be a fun ride, and a hugely disruptive business. We can’t wait!