Deal focus: Shiprocket joins the tribe

Tribe Capital is best known as the San Francisco-based venture capital firm comprising many of workforce collaboration platform Slack’s early backers. Having previously restricted itself to deals in the US, Canada and the UK, Tribe recently made its India debut by leading a $13 million Series C round for Shiprocket, a logistics aggregator that connects small businesses to the shippers best positioned to fulfill deliveries.

“You have a certain expectation when you're ordering from Amazon and other e-commerce providers. Shiprocket helps millions of people that run businesses out of homes, cars, rickshaws or by the side of the street meet that,” says Arjun Sethi, co-founder of Tribe, when asked what drew him to the start-up.   

Tribe, which prides itself in a data-driven approach to finding product-market-fit, requested the standard “data dump” from Shiprocket. Sethi believes this facilitates more objective assessment than the discussion-based evaluations where trust, instead of data, is the main currency. 

Even an early-stage start-up’s balance sheet doesn’t always give a full picture, Tribe believes certain mathematical models are emerging that allow VCs to glean insights. For example, it relies on growth accounting, which breaks down growth-related metrics into a digestible format, and user categorization based on the extent of activity. The view is that successful ventures demonstrate similar patterns.

“They've been scaling very prudently as opposed to other start-ups that burn a lot of cash. The unit economics work not just for Shiprocket but also for the customers. It’s the type of business you want to back,” Sethi says. “We were in India for a couple of months and saw a lot of companies.” 

Shiprocket is not alone. Several other start-ups offer the same service and a loud minority of vocal yet dissatisfied users can also be found complaining online about the market leader. Shiprocket now has more than 35,000 sellers on its platform and boasts the widest set of courier partner relationships. Sethi notes that conversations with these partners indicated high levels of satisfaction.

The company’s future plans include a seamless integration with conversational commerce. This rising trend, whereby an intelligent software solution picks up user input from a chat to assist an ongoing transaction, should also help in smaller towns where consumers are not as familiar with smart phones. 

Saahil Goel, Shiprocket’s co-founder and CEO, has indicated he would like to expand internationally. Sethi is broadly supportive, noting that the issues faced by small businesses in Southeast Asia and the Middle East are not so different from India. Ultimately, ensuring the world becomes smaller for small businesses is the company’s long-term goal.  

“If there is a merchant in Mumbai who is doing a great job in terms of product quality, you want to be able to provide him or her the ability to ship goods to Singapore,” Sethi says. “That's a powerful value proposition – small and medium-sized businesses are the heartbeat of any modern economy.”

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• Topics
• Expansion
• Technology
• South Asia
• Early-stage
• India
• Tribe Capital