James Chin Moody calculates that the army of couriers used by Sendle since his business kicked off six years ago has travelled more than 64 times to the sun and back. That’s some 21 billion kilometres carrying parcels for small businesses. Now, the company has firmly set its sights on beating Australia Post - the largest local player in the game. Indeed, so successful is its business model that Sendle now operates in the US and has plans to enter other markets.

“Australia Post’s clients have to queue to send their parcels. That’s not easy. And the point-to-point is very expensive,” James explains. “But we found that couriers had idle capacity in their trucks. After their deliveries were made, they were going back to base empty. We negotiated access to their trucks so they could ship our customers’ parcels. It’s great that we found a painful problem to solve for small businesses. Many stores turn to online to sell something. They can collect payment. But what then? How do they ship it? For e-commerce, you have to be able to serve the whole country and send the goods in a variety of ways.”

Federation Asset Management’s Neil Brown now has close ties with Sendle because his fund led its Series B capital raising. Neil says he was attracted by a couple of core aspects. It has a huge addressable market in e-commerce, and it is tackling the pain point of shipping for many businesses. “Australia Post has a necessary place in the market, but it’s not necessarily well tailored for small and medium-sized enterprise customers,” he said. “When Federation anchored the B round raising, Sendle’s business model was proven and it was achieving material amounts of revenue by sending a good amount of parcels. It was a business you could do due diligence on. It was a real thing.

“We had a background in transport, logistics and infrastructure, and Sendle was an innovative business within that broader sector. We liked the model. It is capital light. Rather than owning its own trucks and warehouses, which is capital intensive, it strings together spare capacity within existing networks. That allows them to be agile and nimble. There is a lot of room left to tailor the experience. We like to see businesses that are attacking their market in a novel or interesting way to provide a solution to a problem. Quality of management was really important. Right from the outset there was a meeting of the minds, shared values between the two of us.”

Sendle’s early growth was spurred by customers, who became loyal users and passed on their experiences to others. Since then, important partnerships have also been developed with eBay, Shopify and Poshmark – some of the largest e-commerce companies in the world. When a buyer completes a purchase, they can easily choose Sendle to ship it to them.

In June this year, a further opportunity was taken to capitalise on expansion when $45 million was raised in a Series C funding led by Afterpay-backed AP Ventures, along with Federation Asset Management, Full Circle and NRMA. Sendle was also winner of the Green Innovation of the Year 2021 at the Finder Awards for its partnership with Bonds couriers in the use of solar powered electric delivery vehicles.

James’s small team initially funded the business themselves, but later turned to venture capital. Four major rounds of capital raisings have been led in turn by NRMA, Full Circle, Afterpay-backed AP Ventures and Federation Asset Management. “Apart from the capital, we value the strategy that private capital brings,” James says. “A lot of these folk have seen it before. That’s invaluable. Being able to see around corners and what lies ahead. It’s the nous about how capital markets work. To me it’s about aligning the business strategy and the capital strategy, or the business plan and the capital plan.”

Sendle qualifies as a BCorp. That means it agrees to balance purpose and profit, such as considering the impact their decisions have on employees, customers, the community, suppliers and the environment to make business a force for good. James says Sendle was Australia’s first technology BCorp, achieving that status in 2014. “We are here to help small businesses thrive by levelling the playing field between big business and the little guys and offering more affordable shipping. It helps put meals on tables and send kids to school. We have also been 100 per cent carbon neutral from day one, and take responsibility for the externalities of the emissions we create by purchasing offsets like planting trees.

This is an important part of Federation’s involvement too. “They think in triple bottom line outcomes, involving all stakeholders rather than just a profit motive,” Neil says. “They are the only carbon neutral courier company in Australia. That was well aligned with our views on renewable energy and the social side of our real estate business.”

Neil says that when Federation signed on, it expected growth to continue at around 50 per cent period-on-period. “During COVID, it was doing 100 per cent. Federation’s money spurred Sendle’s growth even more, including its entry into North America. “That is obviously a massively larger addressable market. There are some differences, but we felt the business model would be applicable. We wanted our capital to be used making that market entry because that’s a real valuation point. In the latter half of 2019, an office was established in Seattle and Sendle sent its first parcel in November 2019. That business is really hitting its strides. We’re really pleased with the progress the team is making. It’s now a considerable contributor to overall revenue.

“It would be wrong to say that I am day-to-day operationally involved as an advisor. It is a step above that, which involves strategic operational direction. It’s not purely a governance role, to ensure that boxes have been ticked. It involves digging into the business, asking the right questions and testing our management team on their thesis so the decisions made by the board are the best we can possibly make.”

Neil talks to James once every fortnight or so, and attends monthly board meetings. Some issues involve business opportunities that he comes across that might fit with Sendle. “Could they partner with Sendle? Are they a logical courier to introduce into the delivery network? Do they have access to technology that would help?”

The C Series round aims to ensure that its Australian and international growth plans are realised. The funds will be used to continue growth in the US and develop in Canada. Expansion into the UK is also on the horizon. “When you have operations in Australia, the US, Canada and perhaps the UK, you improve the fly wheel for the business as a whole. You can minimise the international cost of shipping, as well as just within the individual countries.”

Published July, 2021

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