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I hope you are doing well. I have moved back to my regular digs in the Northeast, leaving sunny New Orleans behind. The weather will affect the writing next week. Let's get busy, there are two things to talk about today.
The Exchange spoke with Laura Behrens Wu, the founder and CEO of Shippo, about her company's partnership with Shopify.
Merchants can get access to the cheaper rates for moving goods with the help of Shippo's software as a service. The company raised $45 million last year and had a valuation of $500 million. When the company raised $30 million, the company's CEO said that her company has a similar gross margin to a cloud service.
The company doubled shipping volume in 2020 and doubled in size in 2019.
When we last checked in with Shippo in early 2021, it had a plan in place to keep the growth going.
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.
If you offer a digital storefront to individual sellers, they expect payments support along with an option for shipping, so that's what Behrens Wu said this week. That is the shipping tool that platforms offer.
The CEO said that after getting interest from marketplaces about 18 months ago, her team got to work on building anAPI for its service that allows others to bake Shippo's service into their marketplace.
There is a revenue share component in the deal, but with other potential partners offering huge volume gains, the math could pencil out well for Shippo. The service gets better with volume. The more packages that Shippo helps ship, the better deals it can land with shipping companies around the world. It has a way to vastly expand its total volume, which could improve its ability to rip monetary value out of the e-commerce shipping world.
We are going to need to check in with the company in a few months to see how things are going, but it all feels rather bullish.
After reading our report on the growth of API-powered startups, he reached out to us. Our thesis is that the company has an APIs that is key to its growth trajectory and that it could be the future-facing business model to beat.
Insurtech has had an up and down few years. There were a number of IPOs that failed to hold onto value after debut. It has been messy.
And yet. The Exchange wrote earlier this year that insurtech venture capital activity was strong last year despite the negative news about some of the sector's best-known names. We tried to figure out why VCs were dumping money into insurance marketplaces back in early 2020.
The VCs are still working on it. Policygenius has closed a $125 million round. Consumers can find and buy different insurance products online with the company's software. Getting people to the right product is a big business. If you will, it's a bit like how Credit Karma was valuable.
Policygenius competitor The Zebra raised $150 million last April, so the round is not a surprise. It shows that public-market news can help accelerate a startup sector, but it can also kill it.
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