Felux: The B2B Marketplace Digitizing the Global Industrial Industry

We at Lightbank are thrilled to welcome Felux, the latest addition to our portfolio!

HQ: Cleveland, OH

Management Team: Dallas Hogensen, Chris Day

The problem: The global industrial industry operates on low-tech and manual processes. 90% of steel is still purchased via fax or email attachment. The North American steel market is a $160B largely fragmented market where there are over 12,000 suppliers and 200,000 buyers. Suppliers have outdated websites with no e-commerce offering or online inventory. Legacy digital technology from decades ago inhibits suppliers from creating a better customer experience. Steel is one of the last remaining industries to adopt technology at a large scale.

Felux’s solution: Felux is building the category-defining business in steel. Felux is a B2B marketplace and supply chain platform for the steel and industrial industry. The platform allows suppliers to manage their buyers using software (instead of multiple cumbersome and local spreadsheets), and access new buyers. Felux’s vision is to provide working capital, logistics, factoring, payments processing and other financial services to suppliers. For buyers, Felux is a one-stop shop to find transparent listings of sellers.

Why we invested:

Massive, untapped, and highly fragmented market: With 12,000 suppliers and 200,000 buyers in the $160B North American steel market alone, there is significant opportunity to adopt digital technology at a large scale. Even though there is an estimated 70% increase in companies planning on selling directly to customers in the next 3–5 years, there is not much innovation in this space. We see similar dynamics in this market as with the insurance industry 5 years ago — i.e., largely pen-and-paper, with very few startup incumbents.

Deeply knowledgeable and experienced founding team: The founding team is well-positioned to succeed in this space, with experience across both technology and industry. Dallas scaled Lyft Business to $100m+ in revenue and Chris has deep industry experience and ran Majestic Steel, one of the largest steel distributors in the country.

Right business model: We’ve seen many startups focus on being tech-enabled brokers but few have focused on building a true tech-enabled marketplace, which we think provides the most moats at scale. Once you have liquidity, you can monetize through value-added services such as logistics, payments, financial services, and more.

We are excited to co-invest with Expa and 8VC! Learn more here.