At a time when e-commerce is exploding due in large part to the pandemic, a business that helps any online merchant ship goods to a consumer in one or two days is going to be in demand. Deliverr is a startup that fits that bill, and today the company announced a $170 million financing round.
The round breaks down to $135 million Series D financing led by Coatue. The remaining $35 million comes in the form of a convertible note led by Brookfield Technology Partners. Existing investors Activant Capital, 8VC and GLP participated in both parts of the investment. In less than four years, the company has raced from from rounds A to D, raising $240 million along the way.
Deliverr co-founder and CEO Michael Krakaris says it has been a rapid rise, but that his business requires a lot of capital. “It has been this really kind of crazy journey, and we’ve been growing very fast, but also this space is very capital intensive, and it’s a winner-take-all market where you gain efficiency at scale. You know scale is what makes your model highly defensible in this space,” Krakaris told me.
The way Deliverr works is it uses software to determine how to get goods to warehouses in parts of the country where they are needed. It then uses these warehouses’ fulfillment departments to help pick and pack the order. The software then finds the fastest and cheapest delivery method and it gets shipped to customers with a two-day delivery guarantee. They are also ramping a next-day delivery product to expand the business.
Deliverr doesn’t actually own any warehouses. It rents out space, and part of the challenge of building this business is establishing relationships with those warehouses and working out a business arrangement, one that is still evolving as the company grows. “A year ago, I would have said we typically wanted to be 5-10% of a warehouse’s business. There are cases now where we are 100% of these warehouses’ businesses. We’ve grown to that level,” he explained.
Krakaris says that the pandemic raised major challenges for the company. Just setting up a relationship with new warehouses could require driving long distances because getting on a plane would mean quarantining when they landed. In some instances there were shortages of items. In others, COVID would shut down all of the warehouses in a given region, forcing the executive team to make a set of business adjustments on the fly, but this constant crisis mentality also helped them learn how to shift resources quickly, a lesson that is highly useful in this business.
The company started 2020 with 50 people and have added 100 employees since. They plan to double that this year, although that is variable depending on how the year goes. He say that another challenge is that he has done this hiring during COVID, and has never met a majority of his workers.
“You know, I’ve never met more than half the company in person, but I’m try to be as open as I can and learn about everyone, and we hold events to try and get to know everybody, but obviously it’s not like being together in person,” he said.
This post first appeared here: https://techcrunch.com/2021/03/03/deliverr-scores-170m-to-bring-fast-delivery-to-every-e-commerce-vendor/