iShip Finds Less Is More When Raising Funding
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Until somebody comes up with a workable IP-based, Star Trek transporter to deliver the goods for e-tailers, the demand for moving boxes from one bricks and mortar location to another will continue to expand.
"Billions and billions of dollars," is the Sagan-esque market size according to Jennifer Fonstad, a director at Redwood City, Calif. venture capitalist Draper Fisher Jurvetson. Fonstad also serves on the board of Web shipping facilitator iShip, a Bellvue, Wash. start-up which has raised $10.8 million in two rounds of funding since October 1998 from Fonstad's company as well as from UPS, eBay Inc., Intel Corp. and Mail Boxes Etc.
iShip is a Web-based, multi-carrier system that allows users to get the best rate, generate a certified shipping label off their PC's printer, notify the carrier for pickup and track all the packages by their own names rather than a having to organize a ton of shipping numbers. In exchange for all this, iShip believes that its customers will pay a nominal fee of something less than a buck a package in addition to the tariff paid directly to the shipping company. So far, UPS, FedEx, Airborne and the U.S. Postal Service are participating.
IShip points out that more than 6 billion packages are shipped in the United States every year and that number is climbing along with the growth in e-commerce.
Founded by three techies and a suit, Fonstad agreed that experience in the shipping field was a key factor in her firm's decision to invest in iShip over other competitors. The techies -- President/CEO Stephen Teglovic, Engineering Vice President William Smith and Operations Vice President John Dietz -- were fresh off a contract designing an online system for UPS. MBA Suit John Jamerson gave the techies a credible CFO that investors could relate to.
Key fund raisers Steve and John say their success in obtaining funding for iShip came after they learned to avoid trying too hard to direct the conversation during meetings with VCs. In addition, they say their standard VC pitch got more effective as it shrank in time from 20 minutes, to eight, to two and finally the most successful when they walked into the conference room with no presentation at all.
Choosing funding partners is vital as well. The eBay relationship just might be the key factor that gives the new firm escape velocity. Later this year, iShip will be promoted by eBay as their recommended shipping service for the millions of people flogging all those Beenie Babies and Ty Series 3 Trading Cards.
In addition to eBay's hard cash investment, this sort of visibility could easily be worth millions to iShip in marketing visibility which, in turn, might reduce the amount they may need to raise in subsequent financing rounds.
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