Start-up aiming to disrupt shipping raises $50 million

A Shyp package being prepared for shipment.
Source: Shyp

Start-up Shyp has raised $50 million in a round of funding led by venture capital firm Kleiner Perkins Caufield & Byers, bringing its total funding to date to $62.2 million, the company said Tuesday.

San Francisco-based Shyp is the latest start-up aiming to upend an existing, and hugely profitable, business, in this case the $300 billion shipping industry.

Here's how it works: If a customer wants to return a pair of pants to, say, J.Crew, he would download the app, snap a photo of the pants and request a pick up at his home or office.

Shyp takes care of the rest for a flat fee of $5 in addition to the cost of shipping.

The company finds the least expensive way to mail the item, whether that's through the U.S. Postal Service, UPS or FedEx. The service is now available in San Francisco, New York, Miami and will launch in Los Angeles next month.

Past investors including Homebrew and Sherpa Ventures also contributed to the round, in addition to independent investors such as entrepreneurs Kevin Rose and Rent the Runway CEO Jennifer Hyman.

"Today, we're aimed at just consumers, but we're growing the market," Shyp CEO Kevin Gibbon told CNBC. "So I think the existing opportunity is large, but the idea of expanding is really exciting."

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Since its last funding round in the summer of 2014, Shyp says its number of shipments has jumped by nearly 500 percent, and customer growth remains steady, surpassing 20 percent month over month.

This growth is due in part to partnerships with companies such as Banana Republic and other retailers to beef up its popular "Shyp Returns" program in which the company will pick up and package the item as well as process the free return for customers.

Shyp also supports returns for retailers like Target and Nordstrom.

Of course, the margins of Shyp's business aren't publicly disclosed at this point, but the company does lease warehouses as well as pay workers to pick up and mail packages. So it's hard to imagine how it could be a very profitable business at least right now.

But Gibbon insists that will change as his company scales.

"I don't want to necessarily say, as a business, when or if we'd be profitable," he said. "But, for us, it's all about growth and, as much as we can invest in growth, I think we'll be better long term as a business."

At least one legendary investor in Silicon Valley is a dedicated Shyp fan: Kleiner's John Doerr announced Tuesday that he is joining the start-up's board of directors.