Cargo, a startup that has figured out a way to let rideshare drivers sell snacks and essentials out of their cars has just raised $5.5 million in a round reportedly called seed preferred financing by the company.
The company locked down $1.75 million in a seed round over the summer, and that was when they were just getting started. Now they have 2,500 cars driving in NYC, Chicago, Boston and Minneapolis with 20,000 drivers signing up in all 50 states.
CRCM Ventures and Eighteen94 Capital, the venture capital fund of Kellogg, made the funding possible. Kellogg is a customer of Cargo, and market and distributes free goods to passengers through the channel along with Mars Wrigley, and Red Bull. IN exchange for free products and a marketing fee, these CPG companies benefit from anonymous data about when their products are given away. This is used to determine what time of day certain products sell most effectively.
“Cargo represents Eighteen94 capital fund’s first channel investment. We see huge potential in the new consumer touchpoint within the passenger economy that Cargo is developing,” explained Simon Burton, managing director of Eighteen94 Capital in a statement. “Cargo provides brands with innovative opportunities to connect to the consumer in their moment of need.”
Cargo is assisted in selling its paid goods with these free samples. It’s been calculated that 30% of all transactions were made after someone had experienced a free transaction with one of the sponsored items. Drivers earn 25% commission on each paid order as well as a $1 base for each order. This includes the free samples. So far, the average driver is calculated to earn $100 to $115 per month, with the top 10% of drivers earning up to $275 per month with the snack system.
With the system of Cargo selling products directly to drivers and securing distribution deals from product manufacturers, each action makes up about half of the revenue. The startup wants to install its hardware, a small vending machine box mounted in the automobile, and its sales software in approximately in 20,000 cars, with a new one opening in a new city each month for the next half-year. Their next goal is to raise a Series A to propel them to 100,000 cars or more.