Logistics software services company Shippo announced it secured $30 million in Series C funding on Tuesday. D1 Capital Partners led the round with contributions from Bessemer, Uncork Capital, and Union Square Ventures. With its latest cash injection, the startup looks to become the shipping equivalent of online payments brand Stripe.
Why Shippo Inspires Investor Confidence
In the last four years, San Francisco-based Shippo has secured $57 million in outside capital. One reason financiers have poured money into the seven-year-old startup is it offers a novel solution to a real-world need. The firm gives its clients the tools they need to manage their shipments across various e-commerce platforms, marketplaces, and warehouses.
The startup’s web application and API give merchants access to shipment tracking, label purchasing, and checkout process tools via an easy to use interface. Also, the company’s platform is interoperable with more than 50 carriers, so burgeoning companies without dedicated logistics divisions can still monitor their customer orders.
Shippo’s subscription service also lets firms automate their returns to make their workloads less hectic.
In addition to simplifying multichannel shipping, the startup also offers its clients a way to expand their operations. The company told Crunchbase its partner businesses experience an average growth rate of 77 percent. Shippo also has the capacity to serve its customers as they scale up. The firm has the digital infrastructure to provide startups and established enterprises with customizable end-to-end shipping support.
A Solid Foundation
Another reason investors have gravitated toward Shippo is the platform’s impressive track record.
Since its founding in 2013, the startup has worked with more than 35,000 companies to ship over 150 million orders. The company has also established a business model that’s allowed it to grow at a remarkable but sustainable rate. The firm derives its revenue from software subscriptions and shipping sales, and its gross margins sit at around 80 percent.
Shippo has also shown that it can utilize outside capital effectively. In 2017, the firm held a $20 million Series B round that provided it with the necessary resources to double its revenue from 2018 to 2019. The online services concern also increased its headcount from 51 to 92 in the last year. With its latest capital infusion, the startup can further its expansion while navigating headwinds created by the coronavirus outbreak.
The firm’s sound upscaling and proven profit generation strategy makes it unlikely to become a promising upstart that falls prey to overexpansion.
The company told TechCrunch it plans on attaining the kind of brand recognition in its sector that Stripe has in the fintech industry. CEO Laura Behrens Wu sees a clear pathway forward by pursuing “every retailer who isn’t Amazon.” Though her outlook is ambitious, the executive based it on a sturdy foundation. Statista predicts the e-commerce market will increase in value from $3.53 trillion in 2019 to $6.54 trillion in 2022.
As a service that simplifies a complex business process while also fostering growth, Shippo could be the next big thing in enterprise subscription services.