Shiprocket eyes investment from Koch, Tribe amid a larger fundraise

The investment, part of a larger funding round of $120 million, may value the company at $1.1-1.2 billion, the same valuation at its previous funding round, the people cited above said on the condition of anonymity.

Koch Investment Group, part of David & Charles Koch Group, will invest in Shiprocket alongside Tribe Capital, the people cited earlier said. Koch Investments is the investment arm of Koch Industries, founded by brothers David and Charles Koch. Koch is also a limited partner in Tribe Capital. 

“The round which kicked off in April is about to be closed," one of the persons cited said. Tribe Capital will acquire both primary and secondary shares through the transaction. 

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Shiprocket, Tribe and Koch did not immediately respond to Mint’s request for a comment.

Globally, investors are increasingly turning their attention to India, seeking to capitalize on the country’s promising investment landscape. Mint has reported that firms like London-based Pantheon Ventures and US-based HarbourVest Partners have expressed intentions to ramp up their investment activities in India.

Shiprocket’s funding journey

Backed by Zomato, Shiprocket made headlines two years ago when it joined the coveted unicorn club after raising $32 million in a round led by Temasek and Lightrock.

Last year, it secured an additional $11 million in an extended Series E round from McKinsey. To date, the company has raised approximately $350 million from various investors, including Moore Strategic Ventures, PayPal, and Bertelsmann, the largest institutional shareholder, according to data provider Tracxn.

Shiprocket's valuation at the same levels as before comes in the backdrop of many startups having to settle for less. Despite a surplus of dry powder among investors, the valuations have yet to return to the highs of 2021. Investors are increasingly favouring companies that have managed to reduce high burn rates and move toward profitability.

In a similar move, StepStone Group, an LP in Nexus Venture Partners invested alongside the fund in Indian quick commerce startup Zepto. 

Read here | Profitability: The new benchmark for startups seeking investor approval

“While Shiprocket seems to have many plans in place to scale up, it has not been able to reduce its burn as much," another person cited above said. 

The company's losses widened to ₹341 crore in FY23 from ₹93.1 crore in FY22, despite operating revenue growth to ₹1,089 crore from ₹611 crore the previous year. 

Large-ticket deals in growth and late-stage companies like Shiprocket are taking longer to close as the era of cheap capital fades. Investors are more cautious, conducting thorough due diligence amid an uncertain macroeconomic environment.

Expansion plans

In April, the company’s managing director and chief executive Saahil Goel had told Mint that Shiprocket plans to expand through acquisitions in marketing, advertising tools, conversion and data platforms, and customer experience enhancements. Over the past two years, the company has acquired five firms—Glaucus Supply Chain Solutions, Wigzo, Pickrr, Omuni, and Rocketbox—to diversify and strengthen its service offerings.

More here | Shiprocket's back to its favourite accelerant: acquisitions

In May, Mint reported that delivery firms like Shiprocket are poised to benefit as a growing portion of their revenue now comes from tier 2 cities and beyond, where online shopping is gaining traction. To capitalize on this trend, many of these companies are working to reduce delivery times and expand their presence, aiming to be closer to customers in these emerging markets.

While shipping remains the core of Shiprocket's business, contributing 80% of its revenues, the company is actively expanding its product lineup. Newer offerings like Cross Border, which facilitates global shipping for merchants on platforms like Amazon and eBay, and Shiprocket Checkout, which streamlines the checkout process for smaller brands, are central to the company's growth strategy. 

According to Goel, the focus will intensify on these areas in the coming year, although the company retains the capability to become profitable if necessary.

Founded in 2017 by Gautam Kapoor, Goel, and Vishesh Khurana, Shiprocket has become a key player in the logistics space, serving several direct-to-consumer brands. 

Despite the challenges of high burn rates and a cautious investment environment, the company is positioning itself for sustained growth through strategic acquisitions and a diversified product lineup. 

Also read | Saahil Goel of Shiprocket: The delivery guy

As Shiprocket continues to navigate the evolving logistics landscape, its ability to adapt and expand will be crucial in maintaining investor interest and achieving long-term success.