Convoy CEO Dan Lewis wrote in a memo sent to employees that “we hoped this day would never come”, reports GeekWire.
“We spent over 4 months exhausting all viable strategic options for the business. However, none of the options ultimately materialized into anything sufficient to keep the company going in its then current form,” he told employees late on Thursday.
Sending shockwaves through the global tech ecosystem, Lewis said the company faced both an “unprecedented freight market collapse” and “dramatic monetary tightening”.
“This combination ultimately crushed our progress at the same time that it was crushing our logical strategic acquirer — it was the perfect storm,” he wrote in the memo.
Amazon founder Jeff Bezos-backed Convoy had around 500 employees before the announcement to shut down core operations.
The company raised $260 million at a $3.8 billion valuation nearly 18 months ago, according to the report.
Lewis said that Convoy will be closing down its current core business operations.
“Some of our team will continue on to handle this windup transition and potential future strategic options (all whom have already been spoken with), today is your last day at the company,” he told employees.
He said that they are in the middle of a massive freight recession and a contraction in the capital markets.
“Convoy’s tech centric approach to trucking created real benefits. It also created the conditions for a truly scalable technology platform and business model that would have yielded real financial gains when market conditions improve. But in the end, market forces were too strong for us to withstand on our own,” said the CEO.
“M&A activity has shrunk substantially and most of the logical strategic acquirers of Convoy are also suffering from the freight market collapse, making the deal doing that much harder,” noted Lewis, who formerly led new shopping experiences at Amazon.
The announcement came just a week after supply chain software startup Flexport said it will lay off about 20 per cent of its workforce.