Exclusive: Logistics platform Fortigo to raise fresh capital for lending foray
Bengaluru-based 4TiGO, owned by Fortigo Network Logistics Pvt. Ltd, is set to raise $50 million (Rs 348 crore) in a fresh funding round to bankroll its plans to offer working-capital loans to members on its trucking logistics platform, a top executive told TechCircle.
Anjani Mandal, CEO and co-founder of Fortigo, told TechCircle: “We believe there exists a gap in access to working capital to the trucking companies, part of a largely unorganised sector, and this gap cannot be bridged by the banking system. In our pursuit towards helping transition the industry towards the organised sector, we now intend to add a lending platform to provide working capital to trustworthy partners of the network.”
Existing investors Accel India Management Co. Pvt. Ltd and Infosys co-founder Nandan Nilekani are likely to participate in the new round, along with some new investors, the names of which Mandal declined to disclose.
Mandal said, “We would start raising about $50 million in the first half of this year, for which the discussions are already on. Most of the money will be going into the financial services business. We have been running our logistics business very well so the funding requirement on that side is very limited. We would break even by the time we do our financial services launch.”
Founded in late 2015 by former Headstrong executives Vivek Malhotra and Mandal, Fortigo provides fleet management services for truck owners, transporters and transport companies.
The company helps its logistics partners manage and track their inventory. It currently has about 35,000 trucks on its platform.
Fortigo started as a marketplace connecting truck companies to manufacturers. It soon realised that the banks were unable to meet the working-capital requirements of the truck companies. Hence, it has decided to give out loans through a lending platform.
Mandal added, “There are truck owners that are not able to get business so we provide services to them as well as to truck drivers. We facilitate digital payments and, in addition to getting the business by providing a solution of fleet owners and trucks, we also enable them to move money through the payment solution system. For a fleet owner, before starting a truck, they need to spend money on various things.”
In order to provide solutions for digital payments, Fortigo has tied up with lenders including ICICI Bank, Federal bank and IDFC Bank.
In May 2017, the company announced its $10 million round of Series A funding from existing investors. Prior to this, it had raised $2 million in 2015.
The company is now looking at a valuation of $250-300 million post the Series B round.
Fortigo has currently set up operations across South India covering districts of Karnataka, Tamil Nadu, Andhra Pradesh, Goa, Telangana and Kerala. It claims to clock a run rate of Rs 100 crore per year and expects to increase it up to Rs 300 crore by the June quarter.
The logistics sector has witnessed significant investor interest in the past five years and several players have emerged in this space.
Towards December-end, VCCircle reported that Zinka Logistics Solutions Pvt. Ltd, which operates business-to-business tech-enabled logistics startup Blackbuck, raised Rs 87.02 crore ($12.43 million then) from existing investors.
In December, Delhivery, another well-funded player in the logistics space, reported a 38% rise in operating revenue for the year through March 2018, even as its losses widened due to higher expenses.
In December, TechCircle reported that LetsTransport, a tech-enabled logistics marketplace for intra-city deliveries, raised Rs 100 crore (around $13.5 million) in a Series B round co-led by Chinese conglomerate Fosun International and strategic investment firm Bertelsmann India Investments.