Venture capital investment in technology has been on the decline in 2022, dipping below $40 billion per month for the first time in a year in May.
However, when you look at the trends more closely, you see that most of that slowed growth is in late-stage and larger tech companies. Meanwhile, early-stage and small-cap tech companies are seeing a steady flow of investor dollars. In fact, while late-stage funding dropped by as much as 38% from 2021, seed-stage funding grew 11%.
That sustained investment activity is driving optimization and demand for small-cap companies, like app-based services, while helping those same companies scale operations in a way that improves margins. From on-demand services like the Rover Group Inc. (NASDAQ: ROVR) dog-walking app to on-demand shipping like the freight app from Transfix, which is expected to go public soon through a special purpose acquisition company (SPAC) merger with G Squared Ascend I Inc. (NYSE: GSQD), the range of industries and services that can be adapted to an app-based, on-demand model is expanding every day.
EzFill Holdings Inc. (NASDAQ: EZFL), for example, is an on-demand fuel delivery app that allows customers to skip the gas station and have their tanks filled wherever their car is parked. The innovative fuel delivery app raised $25 million during its initial public offering (IPO) last September and has used that capital to rapidly scale and expand, improving its margins as it does so.
$25 Million IPO Funds Operational Optimizations To Bring Down Costs, Improve Margins
In the past year, EzFill has grown from the 13 delivery trucks it operated pre-IPO to a fleet of almost 50 vehicles. With more trucks, the company has been able to meet increasing demand as commercial customers continue to rely on the EzFill app to fuel their service vehicles during off hours. EzFill will also use that expanded delivery capacity to reach individual customers — a market segment the company plans to penetrate with a new brand awareness campaign.
While scaling to meet increasing demand, EzFill is keeping the cost of deliveries low thanks to in-app scheduling that allows delivery routes to be optimized to offer the fastest delivery with the shortest drive time between customers.
On the supply side, daily fuel purchasing directly from the port has allowed EzFill to benefit from discounted volume pricing and avoid the cost of storing that fuel. Meanwhile, the app’s real-time pricing allows the company to charge competitive rates based on the customer’s location.
By charging comparable market rates while eliminating or reducing many of the costs associated with operating a network of gas stations, EzFill has achieved high margins that far outpace industry averages. In its latest quarter, for example, the company reported a 49-cent-per-gallon margin, a dramatic increase over the 3- to 7-cent-per-gallon margin reported by gas retailers.
As the company expands into new territory the company hopes to continue expanding its customer base while enjoying consistently high-profit margins.
EzFill is a leader in the fast-growing mobile fuel industry, with the largest market share in its home state of Florida. Its mission is to disrupt the gas station fueling model by providing consumers and businesses with the convenience, safety, and touch-free benefits of on-demand fueling services brought directly to their locations. For commercial and specialty customers, at-site delivery during downtimes enables operators to begin their daily operations with fully fueled vehicles.
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TraDigital IR- John C. McNamara