Cargo raises $22.5M
Thanks to VentureBeat
In-car commerce startup Cargo has raised $22.5 million in a series A round of funding led by Peter Thiel’s Founders Fund, with participation from Coatue Management, Aquiline Technology Growth, CRCM Ventures, Rosecliff Ventures, Kellogg’s Eighteen94 capital, RiverPark Ventures, and a series of notable individual investors, including Zynga founder Mark Pincus and Def Jam Records’ CEO Paul Rosenberg.
The news actually leaked earlier this week via an SEC filing, but Cargo officially announced the news today, as well as revealing how it plans to spend the money.
Founded out of New York in 2016, Cargo partners with brands across confectionery, electronics, cosmetics, and more to offer ride-hailing passengers access to goods — including chocolate bars and USB cables — during their trip. For most of its short history, Cargo has worked as an unofficial supplier to drivers within the ride-hailing industry, doling out transparent cases in which to display goods to passengers. The rider can pay using the usual array of mobile payment services, such as PayPal or Android Pay.
Back in July, however, Cargo entered into an official partnership with Uber to become its exclusive in-car commerce provider globally.
Above: Uber and Cargo
Cargo first launched last summer in New York and Boston before expanding its coverage to Chicago and seven other cities in the following months, and it now claims 12,000 activated drivers.
The company had previously raised around $7 million in financing, most of which arrived via a follow-on seed funding round earlier this year from big-name investors that include CRCM Ventures, Kellogg’s VC fund Eighteen94 Capital, and Techstars Ventures.
With another $22.5 million in the bank, Cargo said it plans to continue growing domestically and internationally. Indeed, in addition to its tie-up with Uber, Cargo also recently struck a licensing deal with Grab, the Singapore-based e-taxi company that recently merged with Uber to consolidate the Southeast Asian market, which resulted in the launch of a new in-car retail service called Grab&Go in Singapore.
Brands
Selling goods to passengers is certainly a sensible way for drivers to increase their revenues — after all, Uber has faced mounting criticism over the amount its drivers take home after expenses and taxes.
Cargo earns money through selling the products, while drivers earn a flat 25 percent commission on each paid sale, plus a $1 base commission for every passenger who orders from a Cargo box. Drivers can also receive payment when passengers order free samples, something that feeds into Cargo’s broader partnerships with brands such as Coca-Cola, Kellogg’s, Red Bull, and Mars Wrigley.
Cargo told VentureBeat earlier this year that drivers can earn up to $500 extra per month through a combination of commissions, referrals, and bonuses, though it said the average driver earned closer to $130.
Still, it’s a value-added service that many riders will likely appreciate on a long journey home from the pub.
“Our default behavior in an Uber is to shop, play games, and listen to music on our phone,” noted Cargo founder and CEO Jeff Cripe. “Riders have ordered more than 2 million products and today transact with us every five seconds. “We brought riders instant commerce, now we’ll help them discover and enjoy games, music, and entertainment on one in-car platform.”
Other investors in the round include former Uber executives Emil Michael and William Barnes; former NBS commissioner David Stern; Arnold Schwarzenegger’s actor and producer offspring Patrick and Christina Schwarzenegger; and journalist, author, and former First Lady of California, Maria Shriver.Sign up for Funding Daily: Get the latest news in your inbox every weekday.