Why Sydney startup Shippit knocked back more than half of its $5 million series A offer

Shippit co-founders Rob Hango-Zada and William On. (Source: supplied)

Australian logistics management software startup Shippit has secured $2.2 million in series A funding, with an eye on expanding into Asia.

The round was led by Aura Group, which started a venture capital fund in May last year with an aim to raise $30 million. Adventure Fund and RTL Group Investments also contributed.

Shippit was originally seeking $3 million but co-founder and executive officer Rob Hango-Zada said the business grew so well during the raise that in the end it didn’t need that much.

“Our subscriber base grew by over 40 per cent [during the capital raising period], with around a 200 per cent increase in monthly revenue. We’ve always been fiscally responsible, however when we reconsidered the amount that was required to fuel our next phase of growth, the figure was actually much closer to $2 million.”

Investors were keen to get on board as well, with the startup claiming that the series A was oversubscribed to a total of $5 million, meaning it ended up rejecting $2.8 million worth of potential investment.

“We received a humbling flurry of interest, however we didn’t think it would be wise to accept more capital than we actually required,” Hango-Zada said.

The startup, now heading into fourth year, says its software now facilitates shipping for more than 750 merchants in Australia, including big names such as Sephora and Topshop. Shippit made headlines last June for allowing Harvey Norman to pull off same-day and scheduled deliveries.

After starting out just helping out local fashion and homeware stores in Sydney’s Surry Hills, the Shippit platform now ships more than 250,000 parcels each month.

The news of its funding success comes on the same day PayPal released research that showed Australian consumers are wanting next-day delivery but most local retailers had no plans to offer such a service — despite the threat of multinational rivals such as Amazon.

Shippit’s new capital will be used to increase head count and support “rapid expansion” into “international markets”, especially Asia.

“[Aura Group’s] strong presence and networks throughout Asia-Pacific puts us in good stead to launch into the region as we aim to make our software available to retailers across the globe,” said Hango-Zafa, who is 33rd on Business Insider Tech 100 along with his co-founder William On.

The series A was conducted by Howard Leibman of Equity Venture Partners, who also pulled off Deputy’s $US25 million round in January.

NOW WATCH: Tech Insider videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.