The transportation industry is a broad umbrella covering everything from automobile parts manufacturers to package delivery concerns to cheap airline seat services. Each subsector has received venture funding at one time or another, but two sectors in particular stick out from the rest for receiving significant attention in the 10 months of this year that have already passed ? and for two very different reasons.
More specifically, the airlines- and aviation-related sector and the mail and package shipment sector have each seen relatively significant action from venture capitalists in the last month, with total disbursements coming in at $55 million.
For mail and package shipping, the interesting point is not the amount of money that has been committed to the sector, but the high number of participating investors.
As for the airlines/aviation-related sector, it has received just about the same amount of money, but with half the number of buy-side players.
According to our VentureXpert database, 12 venture capital firms have contributed approximately $70 million to five mail and package shipment companies since January. In comparison, only six venture capital firms committed the same amount of money to the same number of companies in the same time period last year.
The average amount of money committed by each firm can be very misleading if you simply divide the money by the number of firms involved. The twelve firms that made plays in mail and package shipment averaged approximately $5.75 million per investment, while each investment in airlines/aviation averaged approximately $11.55 million.
Big Deal
In reality, however, that?s not the way the individual investments panned out as one deal in particular stands out from the rest of the transportation deals closed in the last two months.
Forest Park, Ga.-based SmartMail, which provides mailing services for flat-sized mail and small parcels, received the majority of the funding allotted to the mail and package shipment sector. Great Hill Equity Partners, Saugatuck Capital, Monitor Clipper Equity Partners, Landmark Partners and another undisclosed venture investor each supplied SmartMail with $9 million in September, for a total of $45 million in a third round of financing ? one of Georgia?s largest ever rounds of venture funding.
Jim Martell, SmartMail?s chief executive officer, said this round will be the last before the company goes public sometime in the next year or two.”The money is to take us to break-even and beyond,” he said. “Funds raised in an IPO could fund some merger and acquisition activity or possibly an international expansion.”
SmartMail has used the venture financing received in the three rounds to enhance its marketing efforts. It now has 30 to 40 salespeople and is starting to co-brand with L.L. Bean and Barnes & Noble.
The company provides delivery services for flat and light parcels that are generally less than five pounds in weight, such as paperback books and compact discs. Among its larger national clients are Dr Pepper/7 Up and CD Universe. SmartMail is also in talks with Amazon.com, Martell said.
As for the lates deal in the airline/aviation-related sector, eBizJets, a business jet transportation service agent for individuals and corporate clients, on Oct. 25 announced a $10 million investment from CSFT Private Equity.
EbizJets will use the funding to meet growing demand for its services and fuel additnal marketing efforts.
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