Shippo Raises $45M at $495M Valuation - E-commerce Growth

Shippo Secures $45 Million in New Funding

This morning, Shippo, a company specializing in shipping solutions for e-commerce businesses, revealed a new investment of $45 million. This latest funding round establishes the startup’s valuation at $495 million.

TechCrunch has identified this funding as a Series D, following the company’s previous Series C round. Notably, Shippo did not formally designate a name for this particular round of investment.

Previous Funding and Investor Confidence

Shippo’s Series C funding, totaling $30 million, was announced last April and valued the company at approximately $220 million. D1 Capital spearheaded both the Series C and Series D rounds, demonstrating a willingness to increase their investment in Shippo’s equity by roughly twofold between 2020 and 2021.

This repeated investment by a lead investor is increasingly viewed as a positive signal regarding a startup’s potential, rather than a cause for concern.

Rationale Behind the New Capital

According to Laura Behrens Wu, Shippo’s CEO and founder, the decision to raise additional funds was prompted by significant advancements in customer acquisition and strategic partnerships achieved throughout the previous year. This progress was discussed during the company’s Q4 board meeting with investors, leading to the conclusion that injecting further capital was a prudent course of action.

Leveraging Scale for Improved Shipping Rates

The timing of this funding is strategically sound. As Shippo expands its customer base, it gains increased negotiating power with shipping providers.

This enhanced leverage allows Shippo to secure more favorable shipping rates, which in turn attracts additional customers. Behrens Wu explained in a TechCrunch interview that initial attempts to engage shipping companies were unsuccessful when Shippo’s customers shipped only small volumes.

Now, with greater volume, Shippo can effectively translate customer demand into advantageous partnerships, ultimately improving the overall value proposition for its customers.

Recent Partnership with UPS

Behrens Wu confirmed that Shippo had already secured a partnership with UPS prior to finalizing the new funding round.

Growth and Expansion Plans

Last year, Shippo experienced a doubling of its platform spend, known internally as gross postage volume (GPV). This metric closely correlates with revenue, as confirmed by TechCrunch, indicating a substantial increase in the company’s top-line performance.

Shippo aims to replicate this growth in the current year, and plans to double its workforce by adding approximately 150 employees.

Future Investments and Strategic Focus

With the influx of new capital, Shippo intends to prioritize investments in several key areas. These include expanding its presence on various platforms, pursuing international expansion – currently a limited aspect of Shippo’s operations – and strengthening its focus on its core customer base.

Potential Product Diversification

TechCrunch inquired about the possibility of Shippo extending its product offerings beyond shipping labels.

The company acknowledged the potential for expansion throughout the entire package journey, from pre-purchase stages onward. However, Behrens Wu emphasized that such diversification is not an immediate priority.

Looking Ahead

The duration of the current e-commerce surge and the impact of this new funding on Shippo’s trajectory remain to be seen.

Should Shippo achieve another year of doubled growth, discussions regarding a potential IPO could commence around mid-2022.