This morning Shippo, a software company that provides shipping-related services to ecommerce companies, announced a new $45 million investment. The new capital values the startup at $495 million. TC is calling the new funding a Series D as it is a priced round that followed its Series C; the company did not award the round a moniker.
Shippo’s 2020 Series C, a $30 million transaction that was announced last April, valued the company at around $220 million. D1 Capital led both Shippo’s Series C and D rounds, implying that it was content to pay around twice as much for the company’s equity in 2021 than it was in 2020. (Recall that investors doubling-down on previous bets as lead investor in successive rounds is no longer considered to be a negative signal concerning startup quality, but a positive indicator.)
Why raise more money so soon after its last round? According to Shippo CEO and founder Laura Behrens Wu, her company made material progress on customer acquisition and partnerships last year. That led to a decision around the time of Shippo’s Q4 board meeting with her investors that it was a good time to put more capital into the company.
In a sense the timing is reasonable. As Shippo scales its customer base, it can negotiate better shipping deals with various providers, which, in turn, help it continue to attract new customers. Behrens Wu noted in an interview with TC that when her company was helping its early customers ship just a few packages, shipping companies it supports on its platform didn’t want to meet with the startup. Now armed with more volume, Shippo can recycle customer demand into partner leverage, improving its total customer offering.
Behrens Wu said that Shippo had secured such a partnership with UPS before it raised its new round.
Turning to growth, Shippo doubled its platform spend, or “GPV” last year. GPV is the company’s acronym for gross postage volume. It roughly tracks with revenue, TC confirmed. So Shippo likely doubled its top-line last year. That’s good. Shippo wants to do that again this year, Behrens Wu told TC. The startup will also double its headcount this year, adding around 150 people.
Now flush with more capital, what’s next for Shippo? Per its CEO, the startup wants to invest more in platforms (where Shippo is baked into a marketplace, for example), international expansion (Shippo only does a “little bit” of international shipping, per Behrens Wu), and double-down on what it considers its core customer base.
TC was curious about how broad Shippo might take its product from its original home in shipping labels. The startup said that there’s lots of room in the journey of a packaged, from pre-purchase on, where her company might expand into. However, Behrens Wu cautioned that such a broadening of product work is not an immediate focus at her company.
Let’s see how long the current ecommerce boom lasts and how far this new capital can take Shippo. If it doubles in size again this year we’ll have to start its IPO countdown sometime in mid-2022.