Covid Crisis Accelerates Scurri Growth Trajectory
Scurri helps online retailers optimise delivery efficiency. Founder Rory O’Connor has required perseverance to maximise the venture’s potential, writes Nick Mulcahy
Everyone knows that e-commerce is booming, but the delivery side can be tricky. Vendors want the best available option among their scores of courier options. Price is one factor and so too is reliability, traceability and speed. Helping to smooth that decision process is Scurri, a Wexford SME that has put in a lot of hard yards in the past decade but has yet to turn a profit.
With a pandemic lift to online transactions, founder Rory O’Connor is confident the venture will turn cash positive in 2021. Scurri is going up against some very big rivals but the company’s patient investors are confident that Scurri’s market niche will eventually pay off.
“Basically we do e-commerce plumbing,” says O’Connor (47), who established the business in 2010. Prior to going out on his own, O’Connor’s roles included ‘Consumer Intelligence Manager’ at Waterford Wedgwood, and he also had a spell at ill-fated AOL. He credits his granny for making the leap from the corporate world to becoming an entrepreneur.
“My grandmother had a corner shop and as a kid I’d sit there and take it all in,” O’Connor recalls. “She worked 364 days a year from 9am to ten at night. My mum wisely went off and became a teacher, but I’ve read a few books where they talk about the entrepreneur gene skipping a generation. There was always something there to do my own thing,
Rory O’Connor learned the business basics in his grandmother’s shop
and before Scurri I did some consultancy. I was going into a businesses and helping them but I wasn’t really doing it for myself.”
Scurri Web Services was incorporated in 2010 and O’Connor’s initial concept for Scurri didn’t work out. The idea was to arbitrage excess courier capacity and offer a courier service to people trading on Done Deal or eBay. The problem with the model was that repeat business was in short supply. In 2014, the strategy shifted to business-to-business, promising shippers a platform that would streamline their dispatch and make it more effective.
The Scurri promise is to enable customers to automatically secure the best service and delivery rates for each order. For this to work, Scurri has to integrate with the couriers – companies such as An Post, Fastway, Royal Mail, DHL etc — so that it can pull their information into the Scurri platform.
Other entrepreneurs had the same idea, and Patrick Wall had a head-start on O’Connor. Wall established Metapack in England in 1999 and developed a SaaS solution for personalised delivery services, signing up c.450 carriers in Europe and beyond. The company was consistently lossmaking but turnover grew at a steady clip, to £36m in the year to March 2018. Later that year US peer Stamps.com came calling and ponied up £170m to acquire the business.
Scurri’s platform is now sufficiently robust and credible to compete with Metapack and attract customers such as VisionDirect and Gousto, the lossmaking meal ingredients in a box venture. However, getting there has taken time and money.
“We have around 55 carrier integrations and each one is complex and takes six to eight weeks,” O’Connor explains. “Generally it takes months to understand how they work, and at our end we have to ensure that it doesn’t fall over. If the order doesn’t go out the door, it has a massive impact on the companies that we’re serving. So it has to be right and you have to be careful.”
Scurri Web Services Ltd booked a loss of €880,000 in 2018, bringing accumulated losses to €4.9m. The company has been very adept at raising the necessary venture funding since it raised its first outside funding of €50,000 from Enterprise Ireland in 2011. Taxpayer funding through the state agency amounted to a further €760,000 in subsequent years, and other long-time supports include Pa Nolan, Brian Patterson, AIB/ACT, UK businessman Scott Weavers-Wright, and a couple of Malta-based investors.
Scurri’s equity capital stood at €4.6m in December 2018 and this was topped up with €1.6m through 2019. The most recent share allotment was in June 2020, when €250,000 was raised from Malta investor Clydagh Ltd, with the issue priced at a 20% discount to the issue price a year earlier.
Scurri organises its funding inhouse, assisted by board adviser Tim Perks. “Many of our private investors have experience in logistics and understand what we’re doing,” says O’Connor. “They know it’s a long game and that you’ve got to build the infrastructure. We haven’t had any massive funding rounds, more a steady flow to keep chasing milestones and building the company. This business takes a while to build, and then it can scale exponentially.”
In recent years, Scurri’s growth track has been consistent: turnover of €1.1m in 2016, €1.24m in 2017 and €1.56m in 2018. The revenue stream is transactional revenue — a slice of courier orders booked through the system — and services revenue which relates to assisting shippers with bespoke requirements. The transaction/services split was formerly 60/40 and O’Connor says the split now is more like 90/10.
The Scurri platform is designed for e-commerce vendors that process c.10,000 transactions per month. So the target base in Ireland is quite small and most focus is on the UK, where O’Connor says there are c.3,000 online merchants who could benefit from the Scurri offering.
He adds that 2020 is on track for c.70% growth, with existing customers accounting for most of that as their e-commerce volume has increased. “From the end of 2018 we expanded the sales team, and the investment up to that point was very much in the product. Now we’re seeing rapid growth of sales and we expect to be EBITDA positive in April 2021, based on how things are going at the moment. It will be fantastic to get to that point after all the hard work, and to see the plan come together.”
O’Connor was 37-years-old when he established Scurri, a good stage in life to take the start-your-ownbusiness plunge, he believes. “You’re not young and foolish and you’ve still got a bit of energy. There’s a lot of misinformation about young people doing startups. In Silicon Valley, I think the average age for successful founders is 47. Having experience of business and working with lots of businesses in different areas was very beneficial for me. At the same time, having young blood in the organisation, people with drive and enthusiasm, is necessary too.”