Logistics startup Slync raises $24M, attempts to distance itself from disgraced founder
Supply chain management software startup Slync, which was at one point valued at $240 million, hasn't had the easiest go of it lately.
Slync's founder, Christopher Kirchner, was charged by the Justice Department and Securities and Exchange Commission (SEC) this month for misappropriating $20 million from the company to fund a lavish lifestyle, including a $16 million private Gulfstream jet, pro golf tournaments, a $495,000 luxury suite at a local sports stadium and failed bids for English soccer clubs. He told private bankers that the $20 million, which amounted to 40% of the $50 million Slync raised from angels and venture firms, represented "a distribution from my company" -- a distribution that Slync's board of directors never authorized.
Meanwhile, some of Slync's staff went months without pay. The company fell behind on payments to vendors, as well as the NHL's Dallas Stars, which Slync was sponsoring at the time. During all this, the startup lost its chief marketing officer, chief revenue officer and chief financial officer.
Understandably, Slync has made a concerted effort to distance itself from Kirchner -- and it's had some success, seemingly. According to filings with the SEC, Slync raised around $24 million -- a combination of equity and debt -- in January. We reached out to the company for more information, and Greg Kefer, the chief marketing officer, agreed to an email interview.
Off the bat, Kefer refused to answer questions pertaining to Kirchner, save that he was suspended from his position as Slync's CEO in 2022. Kefer referred me to this statement:
We are aware of FBI activities related to an ongoing federal investigation into the personal activities of Slync’s former CEO, Christopher S. Kirchner ... Slync is cooperating with the government in its investigations and, as a victim of Christopher Kirchner’s actions, looks forward to a just resolution of this matter. This investigation is not the company's primary focus. We have moved on with our new CEO, John Urban, and are focused on delivering next-generation technology to the global logistics industry.
Kefer disclosed that Goldman Sachs led Slync's latest round (with participation from Blumberg Capital, ACME Ventures, Gaingels) and "remains committed to the Slync value proposition," despite the recent turmoil. He also said that the company has plans to expand the team "substantially" over the next year and that annual recurring revenue is "growing rapidly," although he wouldn't divulge the size of Slync's customer base.
Kefer claims that the new cash will be primarily put toward "expanding the scope" of Slync's technology beyond containerized freight, air freight and specialty cargo processes -- its current focuses. To date, Slync has raised a total of more than $100 million in venture debt and equity, excepting a loan it received as a part of the U.S. Small Business Administration’s Paycheck Protection Program.
"Obviously the fact that we just raised $24 million helps us weather a lot in the coming months," Kefer said. "But this infusion of funds is also an indication that our investment partners see the potential in Slync’s technology."
So what is Slync's technology?
At a high level, Slync connects disparate shipping and logistics systems, ingesting and processing data to (ideally) automate various repetitive processes. Drawing on a range of data sources including enterprise resource management systems, customer relationship management systems, and transport management systems, visibility service providers, email, PDFs and spreadsheets, Slync attempts to highlight key information for users, offering collaboration tools and "role-based" workflows for communicating and sharing that info.
"Slync provides a technology platform that allows large global shippers to finally do away with manual processes that continue to plague the logistics industry. There’s a lot of tech out there, and that’s part of the problem, because it's created disconnected silos of data and operational tools," Kefer said.
But lots of startups do the same. By one estimate, the market for supply chain management software was valued at $15.8 billion in 2022.
Tive and Altana, firms developing supply chain visibility tools, recently raised $54 million and $100 million, respectively. Supplier experience management platform HICX landed $30 million not long after, and FourKites -- which helps manage global freight shipments -- nabbed its own recent $30 million tranche as part of an earlier-announced, strategic partnership with FedEx.
Kefer argues that Slync can stand out -- and succeed -- in the crowded field, but color me skeptical. Setting aside the fact that hiring might be a challenge, given the company's historical payroll issues, Slync's latest funding tranche was only a fraction of the size of the previous, all-equity tranche -- suggesting Kirchner casts a long shadow. And while logistics companies were the VC darlings of 2021 into mid-2022, funding has slowed considerably since then.
For what it's worth (and to Kefer's earlier point), Goldman Sachs hasn't stepped away. Darren Cohen, a partner there, had this to say when contacted for comment:
"During the COVID pandemic, loaded container ships anchored offshore and empty store shelves showed everyone what happens when the international supply chain breaks down. We believe the Slync platform provides an innovative solution that brings the global logistics industry fully into the digital realm. The value of this technology is significant in our opinion."