Transportation company HopDrive said Tuesday it has raised $8 million in Series A funding and plans to use the money to expand into new markets.
The round was led by Atlanta’s Cox Enterprises Inc. and included participation from Atlanta venture capital firm Overline, St. Louis automotive logistics firm Acertus and Ally Ventures.
Richmond-based HopDrive provides a concierge service for fleet management companies, auto dealerships and others in the transportation sector. HopDrive’s drivers move vehicles from one location to the next, not people. The company operates in nine markets.
“We are going to target a minimum of 20 markets open over the next 24 months,” said Nick Mottas, co-founder and CEO.
The company operates mostly on the East Coast but also has a presence in Houston, Dallas, Phoenix and Chicago. Mottas said the company is not sure exactly where the expansions will happen, because it still is working with several partnerships. It hopes to have Baltimore, Orlando, Florida, and Nashville, Tennessee, up and running in the next 90 days.
“We need to understand the demand across different markets and look at their priority on where we should go next,” Mottas said.
Mottas and Rob Newton, co-founder and CTO, both have backgrounds in transportation. The company completed a $1.5 million seed round in 2021 and rebranded. Investors included Overline, Automotive Ventures, Estes Express Lines and Kevin Nolan, founder of Nolan Transportation Group, and OTR Capital. That money was also used to expand into new markets.
The company initially focused on auto dealerships and mechanic shops. Mottas said people have historically used a shuttle service or an Uber to get transportation while a car is in the shop, but that can be time intensive. HopDrive reduces the amount of time a person must be away from a job, because its drivers move the vehicles to and from the maintenance facility.
Mottas said the company has started to find a foothold in the fleet management market. HopDrive learned that fleet management companies have a problem with short-term vehicle movements. A truck might bring a load of vehicles into a city, but the vehicles might need detailing, servicing and other work. HopDrive is able to move the vehicles to the different locations before they go into fleet services.
Mottas said HopDrive “fell into” working with fleet management companies. They said they had discussions with fleet management employees and listened to their problems and concerns. They realized that HopDrive could solve a real problem.
“You always keep your eye out for a business opportunity,” Mottas said. “We had the privilege of being introduced to a couple of fleet management companies and began to understand the use cases. We began to understand the struggles that they have.”
HopDrive has 26 employees and plans to have around 50 within the next year. The company’s drivers are gig workers much like Uber, Lyft and DoorDash
Mottas declined to give revenue numbers but said each drive transaction is profitable. The company, he said, worked hard early on to calculate the unit economics and establish the price based on that information. The challenge, he said, is building the infrastructure of accounting and IT into the organization. That costs money.
Mottas said HopDrive always hires a manager in each new market. The person is responsible for recruiting and training drivers. The company has found a lot of drivers switch between different driving apps and are always looking for new opportunities, he said.
Mottas said the company set a target for the funding round and started making pitches back in June.
“We got a lot of meetings,” Mottas said. “We had done a really great job of networking. We had identified the strategic VCs that we wanted to talk to. We didn’t have any problem getting in front of those VCs.”
