Telstra Ventures backs company aimed at shattering Amazon’s last mile delivery business

Telstra Ventures has backed a challenger to Amazon’s delivery network in the US – which has emerged a stone’s throw from where Jeff Bezos founded his tech behemoth in the 90s.

Pandion boss Scott Ruffin with some of the start-up's staff.

A start-up backed by Telstra Ventures has raised $US41.5m ($63.m) as it seeks to turn the tables on Amazon and disrupt the tech behemoth last mile delivery business thanks to artificial intelligence.

Pandion is based in Bellevue, Seattle – a stone’s throw from the garage Jeff Bezos built his Amazon empire in the mid-1990s. Amazon insider-turned-challenger Scott Ruffin founded the company, hiring dozens of workers laid off by Meta, Tesla, Google and others.

It has attracted a suite of big name clients, including Saks Fifth Avenue, and has a network of 500,000 “final mile” delivery drivers across the US.

Its series B funding comes as Amazon has been ramping up its delivery network in Australia, offering free next day deliveries for its Prime customers and recruiting a fleet of contractors as part of its successful Delivery Service Partner program.

Pandion delivers to more than 80 per cent of US homes.

Mr Ruffin’s goal is to provide Amazon-like speedy and affordable deliveries to all companies and consumers – not just Amazon Prime customers.

He said the $US41.5m raising – led by Revolution Growth, joining Telstra Ventures, Playground Global, Prologis Ventures and other existing investors – would ensure Pandion was “positioned to disrupt e-commerce delivery for brands of all sizes”.

“Companies can no longer rely on just the national parcel carriers, but they also don’t have the capabilities and resources to build their own parcel delivery capability or a diversified network of national and regional carriers. They need an alternative. That’s where Pandion comes in.”

The company delivers to more than 80 per cent of US homes and leverages machine learning and its proprietary universal label to “make the best delivery decisions”.

In addition to the capital raising, it has also made a raft of executive appointments. These include former Amazon alumni Brent Cervenka and Jeff Petersen, who have been hired as chief operating officer and head of network design and strategy, respectively.

It has also appointed Jay Sackos as vice president of sales. Mr Sackos has spent 20 years in transportation sales at Dolly, Schneider National and CH Robinson. Former Walmart executive Austin Luhman rounds off the new appointments, as Pandion’s new head of product.

Telstra Ventures initially invested in Pandion as part of its $US350m Fund III, which closed in late 2022. The fund has backed companies across what Telstra Ventures call “all the Cs”: cloud, cyber, crypto, carbon and climate, coders, creators and consumers, as well as other fast-growing software and digital sectors.

Telstra Ventures general partner Steve Schmidt said backing Pandion was a no-brainer.

“Who doesn’t like Amazon Prime? The same team who helped build Amazon’s amazing delivery business are now building the Amazon delivery experience for everyone else,” Mr Schmidt said. “The business has now scaled to cover more than 80 per cent of US homes through its own AI based delivery network which includes 500,000 national, regional, and local delivery drivers for final mile delivery.

“It is a privilege to invest in such an incredible and talented team that’s truly reimagining a new set of scalable possibilities for parcel delivery. Given the rapid advances Tesla is making in autonomous vehicles, and the advance others are making in AI robotics, it’s not hard to imagine a highly automated delivery system, even for the final mile.”

But Amazon isn’t standing idle. The company has a division dedicated to robotics and AI. It is investing $1.6bn in its Australian network, building five operation sites, including a robotics fulfilment centre in Melbourne.

Revolution Growth partner Kristin Gunther, who will join Pandion’s board, said effective shipping and delivery networks were essential in keeping households and economies running.

“But consumer demand, driver shortages, and rising costs regularly threaten the system. At a time when retailers are diversifying their carrier portfolios, Pandion can offer a more flexible and responsive shipping network,” Ms Gunther said.

Proof and Sentinel Global also participated in the funding round as new investors.