The startup Flexe, dubbed the "Airbnb of warehousing," on Tuesday confirmed a previously rumored $43 million venture capital funding round, furthering speculative investment in new models designed around giving shippers tools to manage seasonal and volatile contract logistics needs.
Seattle-based Flexe, founded in 2013, pioneered a model where it allowed shippers to get access to unused warehousing space on a short-term basis, similar to the way Airbnb allowed homeowners to allow travelers to tap into unused residential space.
Flexe’s latest round, which takes its total investment to $63.5 million, comes just weeks after Atlanta-based Stord and Culver City, California-based Flowspace nabbed nearly identical Series A funding rounds — $12.3 million and $12 million, respectively. While Stord acts as more of a fourth-party logistics provider than a pure warehousing spot marketplace, the collective funding into such models shows investors believe shippers will grapple with increasingly complexity related to fulfillment and demand swings.
Flexe said it will use the funds to accelerate the development of its technology platform and increase headcount. It currently has more than 1,000 North American warehouses in its network. The company in 2017 added next-day delivery to its offerings, in an effort to aid retailers struggling to meet next-day fulfillment market mandates. Aside from ecommerce fulfillment and more traditional retail distribution, Flexe sees “inventory overflow” as a key driver of business. That overflow includes peak season spikes — the “do you build a church for Easter?” dilemma — but also unexpected excess inventory.
The Flexe model has been called warehousing-as-a-service, or on-demand warehousing. “We believe the on-demand warehousing category will be as big as, if not bigger than, on-demand cloud computing, cars, and lodging,” CEO Karl Siebrecht said in a statement.
Its clients include Walmart, Ace Hardware, the health care and supplement company hims, the electric scooter operator Lime, and the household goods shipper Great Jones.
Those skeptical of the on-demand warehousing model say that some shippers don’t get value from such short-term engagements. Larger shippers, for instance, are more likely to leverage their space needs directly with contract logistics providers than to use an intermediary or marketplace software, one analyst told JOC.com. Other shippers, however, are willing to pay premiums for flexibility when it comes to inventory staging.
These new warehousing technology models come as warehousing space is at a premium. Average rents for US industrial space rose for the 21st straight quarter in the first three months of 2019, but the proportion of available space versus total buildout is narrowing.
Initially revealed last month by Pitchbook, an aggregator of publicly available financial and venture funding information, Flexe’s funding round was led by Tiger Global Management and Activate Capital and includes new investments from Madrona Venture Group and follow-on investments from Redpoint Ventures and Prologis Ventures.