[ad_1]
Welcome to The TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s inspired by the daily TechCrunch+ column where it gets its name. Want it in your inbox every Saturday? Sign up here.
Happy Saturday, friends; I hope you are well. As you read this, I have scooted back to my regular digs up in the Northeast, leaving sunny New Orleans behind. Yes, next week’s writing will be more emo on account of the weather. Regardless, there are two things to talk about today, so let’s get busy! — Alex
When APIs evolve into platforms
Earlier this week, The Exchange chatted with Shippo founder and CEO Laura Behrens Wu about her company’s announcement that it has inked a partnership with Shopify.
Shippo is in the shipping game, offering a SaaS offering to merchants that gives them access to bundled, and therefore cheaper, rates for moving goods. Last year the company raised $45 million at a valuation of just under $500 million. (Back in 2019, when the company raised $30 million, Behrens Wu said that her company has SaaS-like gross margins, for reference.)
The company has grown quickly, doubling shipping volume in 2020 — which at the time tracked loosely with revenue — and doubled in size back 2019.
In early 2021, when we last checked in with Shippo, it had a neat plan ahead of it to keep that growth flowing (emphasis added):
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.
This week, Behrens Wu said that offering shipping is now “table stakes” for both platforms and marketplaces, so individual sellers expect that if you offer them a digital storefront, they expect payments support along with an option for shipping. Shippo wants to be that shipping tool that platforms offer.
The CEO said that after getting inbound interest from marketplaces about 18 months ago, her team got to work on building an API for its service that allows others to bake Shippo’s service into their marketplace.
There’s a revenue share component in the deal, according to Behrens Wu, but with Shopify and other potential partners offering huge volume gains, the math could pencil out well for Shippo. That’s because its service gets better with volume. The more packages that Shippo helps ship, the better deals it can land with shipping companies around the world. And now it has a way to dramatically expand its total volume, perhaps improving its ability to rip monetary value out of the e-commerce shipping world.
We’re 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.
Behrens Wu reached out after noting our reporting on the growth of API-powered startups. Well, now the company has an API that is key to its overall growth trajectory, our thesis holds: SaaS is neat, but APIs could be the future-facing business model to beat.
Insurtech: Still not dead!
Not to overly savage the expired equine, but insurtech has had an up and down few years. From huge fundraises for neoinsurance startups to big dollars for insurtech marketplaces, we saw a string of IPOs that failed to hold onto value post-debut. It’s been messy.
And yet. The Exchange wrote earlier this year that insurtech venture capital activity was actually strong last year despite the barrage of negative news concerning some of the sector’s best-known names. Things were once so hot that we tried to figure out “why VCs are dumping money into insurance marketplaces” back in early 2020.
Well, the VCs are still at it. This week Policygenius announced that it has closed a $125 million round. The company’s software essentially allows consumers to find and buy different insurance products online. Given how large the insurance market is, getting folks to the right product is big business. A bit like how Credit Karma was valuable as heck, if you will.
Policygenius competitor The Zebra raised $150 million last April, for reference, so the Policygenius round is not an entire surprise. But it does underscore the fact that public-market news can help accelerate a startup sector, but that it can’t — it seems — kill it off.
[ad_2]
Source link
Comments are closed.