Hi, Federico (one of the co-founders) here. We thought a lot about talking in terms of Uber (or Heroku in the add-ons part) and we are aware of this fear of name dropping.
The reality is that we think Uber is a whole lot more than a simple "Connect X driver to Y passenger". They've created a mesh of human transport infrastructure that can take you from point A to point B in the most efficient way. Trust me, the technology behind this is not trivial and their system is almost like a living being, constantly changing itself to meet demand. We're doing the same with trucks and commercial cargo. We don't have the "I need a ride now" problem (although we do have schedules to follow) so it makes it a bit easier for us.
On the tech side this means that we have to predict supply/demand for the products we move. We also have to take the 2000+ trucks we have and treat them like a big pool of resources so we can get volume pricing, make good use of deadhead miles (done with location/route info.) and optimize underperforming routes (by getting more customers A -> B/B -> A.
The relationship is that they are taking an underutilized resource (trucks) and increasing utilization through their network much like Uber is filling cars.
The current "our business model" section in the letter is confusing and I think the letter should be more up front about what their value proposition is. I had to read their "nosotros" page to figure it out:
Más del 25% de los camiones en Brasil, México, Colombia y
Argentina viajan vacíos cada semana, dejando de lado
ganancias potenciales de US$4.5 billones cada mes. Nuestra
tecnología pone en contacto a quien tiene la carga con
quien la puede transportar, así el transportador nunca
viajan vacío,...
More than 25% of trucks in Brazil, Mexico, Colombia and Argentina travel empty every week leaving behind potential profits of $4.5B dollars. Our technology puts people with cargo in contact with transporters, so the transporter never travels empty,...
It appears they are filling empty trucks which I find similar to "empty leg flights" which are sold by private jet operators.
Thanks for the feedback, and from a first read of what we do, yes. You are spot on.
We believe we can make use of a severely underutilized pool of resources (empty trucks) in developing countries, some of it as a result of a huge industry that has transformed very quickly to adjust to the organic growth, as well as to other factors like free trade agreements that have escalated the need for transportation companies to be much more competitive in a global landscape.
The same challenges apply to the cargo generators, which have relayed on excel sheets or custom tools to manage their logistics, but that are constantly struggling to find the right solution to manage their specific needs.
I won't bore you with details, but logistics is much more than just putting cargo on a truck (think of security, insurance, satellite tracking, etc...), and we are integrating several services to simplify this for our customers.
I don't know how successful this public effort can be, but I think it's the first time I see a company using a long-form sales letter to find investors. I'd love to read an update from the people behind the company once they're done with their fund-raising and see what the results of doing this were vs. traditional fundraising.
MiCarga cofounder here. We wanted to tell our story, in a format that suited our position right now. It is an experiment, and we are fully aware that it may not be the right format for every investor. Regardless, we wanted a space to tell our story in more detail, and start better conversations with the right investors.
Hi! This is an experiment we decided to run since we want to get this out to as many people as we can. Our network of investors is mainly based in LatAm and it's too small so this is our way of getting it out to the public.
It's long and detailed because we're tired of "elevator pitches", we want interested people to know as much as they can about our company and what we're aiming for. We feel this is more responsible (you as an investor know upfront what you're dealing with) and it's more time-efficient (we don't have to spend 20 minutes explaining what we do at the beginning of every call (that's actually BS, we still have to do this :P)).
I don't know for certain, but US Companies can't do pitches this way. It isn't legal. I don't know what the rules are for US Companies investing in Non-US Companies in this regard. But I would do some serious checking. It would suck to raise money only to have the FTC decide you did so in an illegal way and have it disappear.
Are you speaking from personal experience, then? Care to share details? I appreciate that you are giving feedback, but it is very vague. What parts of the copy do you feel are not ok?
MiCarga founder here. This is not a solicitation, and we explicitly put it here before the beginning of the letter:
"(Note: The information in this document does not constitute an offer or solicitation to purchase securities of the Company)."
We wanted to use a format to tell our story to potential investors, and we felt that this format was fitting. Once again, the format is an experiment, but in no way it is a solicitation. We see it more as a first step to start a longer conversation with potential investors (accredited ones, to be precise).
"(Note: The information in this document does not constitute an offer or solicitation to purchase securities of the Company)."
"We are sharing this letter with you because we believe you might be interested in investing in our company. We'll tell you a bit about our story, where we are today, why we're raising funds and why we are the best bet you can make today."
"If you're interested in being part of our round, please email us two possible time slots to talk:"
You might be surprised to learn how broadly the SEC and courts have interpreted terms like "offer" and "general solicitation".[1] An offer is any "attempt ... to dispose of ... a security ... for value".[2] The SEC "has confirmed that uses of ... unrestricted websites ... constitute general solicitation."[3]
Had you done this last Friday, you would be hard-pressed to find an experienced securities lawyer who would tell you that the letter posted on your web site does not violate US laws. The good news is that due to regulations that went into effect on Monday, you have not yet violated US securities laws. However, because you've engaged in general solicitation, you are now subject to, among other things, additional investor verification requirements before you actually sell securities to any US investor.[4] If compliance with US laws is or will be important to your business, be sure you get help from a very experienced securities lawyer with the rest of your fundraising process. There are many traps for the unwary.
[1] Some illustrations:
SEC v. Arvida Corp., 169 F.Supp. 211
Chris-Craft industries, inc. v. Bangor Punta Corp. 426 F.2d 569 (1970)
SEC v. Commercial Inv. & Dev. Corp. of Florida, 373 F.Supp. 1153 (1974)
SEC v. Thomas D. Kienlen Corp. 755 F.Supp. 936
Diskin v. Lomasney & Co., 452 F.2d 871
Hocking v. Dubois, 885 F.2d 1449
As another HNer kindly pointed out to me, the rule requiring the filing of a Form D 15 days before any general solicitation is, at this point, still just a proposal.
But based on what we're seeing here, it does appear that at least some of the companies already engaging in general solicitation don't even know that they'll need to file a Form D if they're successful in raising funds.
Thanks for the tip drakaal. As mmvvaa points out, general solicitation is now accepted in the US. We have talked to our lawyers and we think we're safe on this side, but if anyone with more knowledge wants to chime in we'd appreciate it.
Solicitation in the US has to be qualified investors, and only after you have the copy approved by the Gov. It isn't as easy as sticking up a web page, and there are serious limitations to what you can say, and how often you can make changes.
>>Solicitation in the US has to be qualified investors, and only after you have the copy approved by the Gov.
...no, not any more since Sep 23. You have to verify they're accredited investors before accepting any investment from them, but you can now broadcast your fundraising from the rooftops.
We are in the same space and to be honest we were amazed by Keychain's launch. According to VentureBeat [0], they had 1 in every 500 trucks in the US on launch day (Aug '12). We launched in May of the same year and we know how hard it is to find good, qualified drivers.
Sadly, there's not a lot of public information about how Keychain works so I can't say for sure if we're doing the exact same thing. I do think we're seeing the same problem though: the last big change in cargo logistics was the introduction of containers for transportation (and that was decades ago). We can do better.
Our focus right now is LATAM, and would most likely head towards other developing markets before trying anything in the US.
That's probably the most pragmatic and best approach: to understand the needs of your specific market area and all of the participants, and nail them. Having met with Bryan a couple months ago, he understood the pain points in the US market (having basically grown up in the industry…) and nailed them. I'm sure he's learned more since we've last spoke with the help he has gotten to carry out his vision.
It's really great to see companies like these. Good Luck!
Hey guys, Federico from MiCarga here. We're happy to answer any questions.
If some of the stuff in the letter sounds familiar it's probably because you've read it before in PG's recent fund-raising articles (recommended reads for everyone raising capital):
- [...] with projections of 1.2M (ongoing [...] - unit?
- "improve our to integration" - get rid of the 'to'
- letter itself is better written than the summary. maybe rework that.
- don't make something a link if you can't click it to go somewhere
- "Torrenegra Labs" should be linked to their site, I will google them anyway
- "Our business model [...] most generic option." Looks like a quote. Is not a quote.
- "We started this company in November 2011 [...] Today we have [...] We made significant progress during our three month acceleration period: [...]" Jumping around in timeline.
- Then I kinda stopped reading and started skimming because it was so unstructured :/
Conclusion: Nice try, but content and presentation lack polish. The text contains lots of interesting information, but seems very unstructured and follow no clear outline. Add some clear headers and restructure the text, rewrite the summary.
Thanks for the feedback. We just fixed some of the more obvious corrections, and look forward to discuss the ones that require a bit more time with the people that we speak with (timeline, etc...).
I had the pleasure of being a judge on a panel when this team was pitching 4-6 months ago as part of the MassChallenge incubator program. They are a great team putting together some solid solutions in the South American logistics industry.
I'm happy to see them making more progress. I hope the fundraising is successful.
- We started development in nov '11 and only officially launched operations in May 16th, 2012, to be precise.
- Our current run rate is US$88,000 (as of our latest numbers). Run rate is an extrapolation of the most current numbers, if they are extended for a year.
- So far, we have grossed more than US$500K. I am not going to dig into our margin details here, but yes. We have grossed more than that since we started operations (may '12).
38 comments
[ 7592 ms ] story [ 960 ms ] threadThe reality is that we think Uber is a whole lot more than a simple "Connect X driver to Y passenger". They've created a mesh of human transport infrastructure that can take you from point A to point B in the most efficient way. Trust me, the technology behind this is not trivial and their system is almost like a living being, constantly changing itself to meet demand. We're doing the same with trucks and commercial cargo. We don't have the "I need a ride now" problem (although we do have schedules to follow) so it makes it a bit easier for us.
On the tech side this means that we have to predict supply/demand for the products we move. We also have to take the 2000+ trucks we have and treat them like a big pool of resources so we can get volume pricing, make good use of deadhead miles (done with location/route info.) and optimize underperforming routes (by getting more customers A -> B/B -> A.
The current "our business model" section in the letter is confusing and I think the letter should be more up front about what their value proposition is. I had to read their "nosotros" page to figure it out:
More than 25% of trucks in Brazil, Mexico, Colombia and Argentina travel empty every week leaving behind potential profits of $4.5B dollars. Our technology puts people with cargo in contact with transporters, so the transporter never travels empty,...It appears they are filling empty trucks which I find similar to "empty leg flights" which are sold by private jet operators.
Thanks for the feedback, and from a first read of what we do, yes. You are spot on.
We believe we can make use of a severely underutilized pool of resources (empty trucks) in developing countries, some of it as a result of a huge industry that has transformed very quickly to adjust to the organic growth, as well as to other factors like free trade agreements that have escalated the need for transportation companies to be much more competitive in a global landscape.
The same challenges apply to the cargo generators, which have relayed on excel sheets or custom tools to manage their logistics, but that are constantly struggling to find the right solution to manage their specific needs.
I won't bore you with details, but logistics is much more than just putting cargo on a truck (think of security, insurance, satellite tracking, etc...), and we are integrating several services to simplify this for our customers.
Btw, it was a good read. I'm definitely not the target audience but it kept my interest.
PS: We will update everyone in our progress.
It's long and detailed because we're tired of "elevator pitches", we want interested people to know as much as they can about our company and what we're aiming for. We feel this is more responsible (you as an investor know upfront what you're dealing with) and it's more time-efficient (we don't have to spend 20 minutes explaining what we do at the beginning of every call (that's actually BS, we still have to do this :P)).
"improve our to integration" doesn't make sense.
First of, our operations are mainly in Colombia and Argentina for now, but we are incorporated in Delaware as a C-corp.
Second, as of monday this week, it is legal. You could find more info here: https://angel.co/public
"(Note: The information in this document does not constitute an offer or solicitation to purchase securities of the Company)."
We wanted to use a format to tell our story to potential investors, and we felt that this format was fitting. Once again, the format is an experiment, but in no way it is a solicitation. We see it more as a first step to start a longer conversation with potential investors (accredited ones, to be precise).
"We are sharing this letter with you because we believe you might be interested in investing in our company. We'll tell you a bit about our story, where we are today, why we're raising funds and why we are the best bet you can make today."
"If you're interested in being part of our round, please email us two possible time slots to talk:"
Absolutely classic.
Basically making it impossible to invest in them. Nothing like death by failure to understand the law.
I don't really like lawyers but you have to keep them around to keep you from killing your company.
Had you done this last Friday, you would be hard-pressed to find an experienced securities lawyer who would tell you that the letter posted on your web site does not violate US laws. The good news is that due to regulations that went into effect on Monday, you have not yet violated US securities laws. However, because you've engaged in general solicitation, you are now subject to, among other things, additional investor verification requirements before you actually sell securities to any US investor.[4] If compliance with US laws is or will be important to your business, be sure you get help from a very experienced securities lawyer with the rest of your fundraising process. There are many traps for the unwary.
[1] Some illustrations: SEC v. Arvida Corp., 169 F.Supp. 211 Chris-Craft industries, inc. v. Bangor Punta Corp. 426 F.2d 569 (1970) SEC v. Commercial Inv. & Dev. Corp. of Florida, 373 F.Supp. 1153 (1974) SEC v. Thomas D. Kienlen Corp. 755 F.Supp. 936 Diskin v. Lomasney & Co., 452 F.2d 871 Hocking v. Dubois, 885 F.2d 1449
[2] 15 USC § 77b
[3] SEC Release No. 33-9415
[4] Good summary written by Naval Ravikant and Kevin Laws at http://techcrunch.com/2013/09/21/why-you-need-to-pay-attenti...
But based on what we're seeing here, it does appear that at least some of the companies already engaging in general solicitation don't even know that they'll need to file a Form D if they're successful in raising funds.
...no, not any more since Sep 23. You have to verify they're accredited investors before accepting any investment from them, but you can now broadcast your fundraising from the rooftops.
[0] https://keychainlogistics.com/
Sadly, there's not a lot of public information about how Keychain works so I can't say for sure if we're doing the exact same thing. I do think we're seeing the same problem though: the last big change in cargo logistics was the introduction of containers for transportation (and that was decades ago). We can do better.
[0] http://venturebeat.com/2012/08/21/keychain-logistics-truckin...
We certainly believe keychain is doing several things right. Even though they are focused in the US at the moment.
Our focus right now is LATAM, and would most likely head towards other developing markets before trying anything in the US.
That's probably the most pragmatic and best approach: to understand the needs of your specific market area and all of the participants, and nail them. Having met with Bryan a couple months ago, he understood the pain points in the US market (having basically grown up in the industry…) and nailed them. I'm sure he's learned more since we've last spoke with the help he has gotten to carry out his vision.
It's really great to see companies like these. Good Luck!
If some of the stuff in the letter sounds familiar it's probably because you've read it before in PG's recent fund-raising articles (recommended reads for everyone raising capital):
* How to raise money: http://paulgraham.com/fr.html
* How to convince investors: http://paulgraham.com/convince.html
* Investor Herd Dynamics: http://paulgraham.com/herd.html
- tooltips on hover over words are confusing
- [...] with projections of 1.2M (ongoing [...] - unit?
- "improve our to integration" - get rid of the 'to'
- letter itself is better written than the summary. maybe rework that.
- don't make something a link if you can't click it to go somewhere
- "Torrenegra Labs" should be linked to their site, I will google them anyway
- "Our business model [...] most generic option." Looks like a quote. Is not a quote.
- "We started this company in November 2011 [...] Today we have [...] We made significant progress during our three month acceleration period: [...]" Jumping around in timeline.
- Then I kinda stopped reading and started skimming because it was so unstructured :/
Conclusion: Nice try, but content and presentation lack polish. The text contains lots of interesting information, but seems very unstructured and follow no clear outline. Add some clear headers and restructure the text, rewrite the summary.
But: Nice product and market!
I'm happy to see them making more progress. I hope the fundraising is successful.
• Launched in May 2012 (but started in Nov 2011)
• Run rate of $88 000
• Gross revenue of $500 000
One of these can't be true.
- We started development in nov '11 and only officially launched operations in May 16th, 2012, to be precise.
- Our current run rate is US$88,000 (as of our latest numbers). Run rate is an extrapolation of the most current numbers, if they are extended for a year.
- So far, we have grossed more than US$500K. I am not going to dig into our margin details here, but yes. We have grossed more than that since we started operations (may '12).
I hope this clarifies it.