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Happy Saturday, friends; I hope you are well. As you read this, I’ve slumped back to my regular digs in the Northeast, leaving sunny New Orleans behind. Yes, next week’s writing will be more emo because of the weather. Anyway, there are two things to talk about today, so let’s get started! † Alex
When APIs evolve into platforms
Earlier this week, The Exchange spoke to the founder and CEO of Shippo Laura Behrens Wue about her company’s announcement that it has partnered with Shopify.
Shippo is in the shipping game, providing sellers with a SaaS offering that gives them access to bundled and thus cheaper rates for moving goods. Last year, the company raised $45 million at a valuation of just under $500 million. (In 2019, when the company raised $30 million, Behrens Wu said her company has SaaS-like gross margins, for reference.)
The company has grown rapidly, with shipping volume doubling in 2020 – followed loosely with sales at the time – and doubling in size in 2019.
In early 2021, when we last checked in with Shippo, it had a nice plan up its sleeve to keep that growth flowing (emphasis added):
Now flush with more capital, what’s next for Shippo? According to the CEO, the startup wants to invest more in platforms (where Shippo is baked into a marketplace, for example), international expansion (Shippo does just 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” across both platforms and marketplaces, so individual merchants expect that if you offer them a digital storefront, they expect payment support along with an option for shipping. Shippo wants to be that shipping tool that platforms provide.
The CEO said that after getting incoming interest from marketplaces about 18 months ago, her team started building an API for his service that would allow others to integrate Shippo’s service into their marketplace.
According to Behrens Wu, there’s a revenue share in the deal, but with Shopify and other potential partners offering huge volume gains, the math could work out well for Shippo. That’s because the service gets better with the volume. The more packages Shippo helps ship, the better deals it can make with shipping companies around the world. And now it has a way to dramatically expand its overall volume, perhaps making it more able to monetize the e-commerce shipping world.
In a few months we’ll have to contact the company to see how things are going, but it all feels a bit optimistic.
Behrens Wu reached out after learning about 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 is: SaaS is neat, but APIs may be the forward-looking business model to be beaten.
Insurtech: Still not dead!
Not to make the expired horses too wild, but insurtech has had a few years of ups and downs. From massive fundraising for neo-insurance startups to big bucks for insurtech marketplaces, we saw a series of IPOs that didn’t hold value after their debut. It’s been messy.
And yet. The Exchange wrote earlier this year that venture capital activity in insurtech was strong last year, despite the barrage of negative news about some of the industry’s best-known names. Things were once so hot that in early 2020 we were trying to figure out “why VCs are dumping money in insurance markets”.
Well, the VCs are still working on it. Policygenius announced this week that it has closed a $125 million round. The company’s software essentially allows consumers to find and purchase a variety of insurance products online. Given how big the insurance market is, getting people to the right product is a big business. Kind of like how Credit Karma was so valuable, if you will.
Policygenius competitor The Zebra raised $150 million last April, just for reference, so the Policygenius round isn’t much of a surprise. But it does underscore the fact that public market news can help accelerate a startup sector, but it doesn’t seem to destroy it.
This post Driving an API to Platform Status – TechCrunch was original published at “https://techcrunch.com/2022/03/19/riding-an-api-to-platform-status/”