The multibillion-dollar departure of Deliverr, a San Francisco, California-based e-commerce fulfillment business, to e-commerce behemoth Shopify is the top story in tech this morning. At first glance, the agreement appears to be an obvious winner. What startup wouldn’t want to sell for billions to a firm that is developing at such a rapid pace as Shopify? When we compare Deliverr’s $2.1 billion exit price to its ultimate private pricing of $2.05 billion established early last year (Crunchbase data), the deal becomes a little more complicated to understand.
After all, no firm wants to depart for a fixed price since it suggests that its most recent investors have put their money to work for an extended period of time with no returns. Locking up cash at a time when interest rates and inflation are both growing for zero upside is really a loss due to the time value of money, or the time cost in this example. Late-stage transactions, on the other hand, are complicated in ways that we can’t understand merely by looking at the figures. Perhaps Deliverr’s most recent round, in 2021, includes conditions ensuring that, in the case of a sale, its most recent investors would earn a defined minimum return.
If this is the case, the purchase may deprive early investors and minor stockholders, such as employees, of some of their stock’s value. We wouldn’t have to speculate about late-stage terms and their potential implications if the agreement had more meat on the bone. Shopify stated today that it will pay $2.1 billion in cash and stock to purchase Deliverr, an e-commerce fulfillment firm located in San Francisco, California. The agreement, which was first reported by Bloomberg in April, is Shopify’s largest acquisition to date, and founder and CEO Tobi Lütke believes it would allow the business to build an “end-to-end logistics” platform for millions of merchants.
In a blog post announcing the purchase, Lütke stated, “Our objective is to not just level the playing field for independent enterprises, but to tilt it in their favor – turning their scale and agility into their superpower.” “By partnering with Deliverr, SFN will provide millions of developing businesses with a simple, powerful logistics platform that will enable them to delight their consumers time and time again.” Deliverr will be integrated with Shopify Fulfillment Network (SFN), Shopify’s fulfillment service that merchants may use to store inventory and fulfill orders, to improve SFN’s merchant inventory management capabilities, according to Shopify.
Shop Promise, a new service powered by Deliverr’s technology, will provide consumers two-day and next-day delivery, as well as increased choices for storage, freight, inventory preparation, and returns. Deliverr co-founder and CEO Harish Abbott stated in a statement that “our technology and experience in inventory management, inventory placement, and demand chain mesh nicely with Shopify’s vision, enabling us to now construct an end-to-end logistics platform together.”
“Our team has a track record of helping businesses of all sizes optimize their processes, and Shopify has been creating the future of merchant-first fulfillment solutions.” We’re thrilled to be a part of Shopify’s goal to improve commerce for everyone by democratizing shipping and fulfillment for small businesses.”