Exclusive: Route raises $40 million Series C at a $1.4 billion valuation

I have a lot of emails from Route and I didn’t even know it.

That’s because the post-purchase tracking startup is near-ubiquitous for prolific online shoppers like me. A quick search in my email shows that I’ve unwittingly used Route to track packages for years, and for everything—Anthropologie candles, Nike sneakers, Alo sweatpants, and whatever it is I apparently needed from someplace called Heaven Mayhem.

But behind those emails (and extensive online shopping) is a business that may not be a household name but which has attained—and retained—its unicorn valuation even as the VC sector has gone into a downturn.

Route has raised $40 million in its Series C, valuing the company at $1.4 billion, Fortune can exclusively report. The round was led by Hanaco VC and included Jaws Ventures, Madrona Ventures, and Granger. Investors in previous rounds include Upfront Ventures and Craft Ventures.

Though unicorn-high valuations always garner attention, Route’s is notable for its resilience: While the post-money $1.4 billion valuation is only a slight uptick from Route’s $1.25 billion valuation in 2022 (when it raised a $200 million Series B), it’s still an uptick. And that’s not nothing—as the unicorpses pile up, retaining a billion-dollar-plus valuation is an achievement.

Why has Route hung in there? To get to an answer, it’s important to understand the problem Route’s looking to solve: When we buy things online, we want to be really confident they’re going to show up.

"People buy more when they have as little fear as possible around delivery, return, etc.,” said Lior Prosor, Hanaco VC cofounder and general partner. “The vision is to own post-purchase and reduce those barriers to purchase to zero.”

It's not even that consumers are unsympathetic when a package gets lost—just that they want to know there's recourse if something doesn’t show for Christmas.

“Consumers are willing to forgive if brands are upfront and communicative about the problems,” Prosor told Fortune.

So, there’s a consumer psychology piece to all this—when a purchase, even a big one, feels frictionless and transparent, you can end up with a “low stakes type of environment like that we’re accustomed to with Amazon,” David Frankel, Hanaco VC partner added. It's easy and feels secure, so you buy more online—rinse and repeat.

By the numbers, Route is pretty sizeable, working with 13,000 brands in the U.S. and globally. The company provides tracking for online shoppers after they’ve bought something and offers what’s called package protection—essentially a kind of insurance, promising that even if a package gets damaged or lost, the customer isn’t on the hook. This month, the company crossed $15 billion in protected purchases and, in 2023, Route’s revenue hit $100 million.

Still, Prosor and Route CEO Michael Yamartino both say that the startup has only scratched the surface of a massive market—even if no one knows entirely what the size of that market is. Prosor estimates that post-purchase as a category is some percent of gross merchandise value, which most global estimates place well above $3 trillion.

"The TAM is literally trillions of dollars around the world,” said Yamartino, who joined Route a year ago and was previously Pinterest’s first head of commerce.

I asked Route to connect me with a customer so I could put a face on the TAM, and was introduced to Ryan Pamplin, cofounder and CEO of portable blender company BlendJet. Pamplin was predictably enthusiastic about Route, but helped clarify the service’s appeal to merchants: "Route is our partner who helps us stand behind our product, and actually helps prevent losses for the customer and for the brand," he said.

Pamplin showed me all sorts of blenders that he had on hand, holding each up in delight: SpongeBob blenders, South Park blenders, Disney blenders, and metallic blenders.

The show-and-tell worked—I got off the call with Pamplin and immediately bought myself a funky blender. The package, of course, is being tracked by Route.

Scoop…Andreessen Horowitz is planning to raise its first private equity fund, as reported by my colleague Jessica Mathews. Read more here.

In other news…Shein confidentially filed to go public in London, Reuters reported yesterday. The fast fashion giant has long been viewed as a bellwether IPO candidate (and a controversial one). Shein’s investors include Mubadala, Tiger Global, General Atlantic, and Sequoia Capital China (now known as HongShan). Elsewhere, OpenAI's acquisition streak continues with remote collaboration-focused startup Multi.

See you tomorrow,

Allie Garfinkle
Twitter: @agarfinks
Email: alexandra.garfinkle@fortune.com
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This story was originally featured on Fortune.com