Warsaw-based Packhelp has been riding the boom in ecommerce and on-demand delivery to scale a business that helps even the smallest brands wrap their wares in eye-catching custom packaging, while counting giants like H&M and UberEats among its customers, too.
Since being founded back in 2015 — launching its custom packaging design platform in 2016 — Packhelp says it’s attracted more than 50,000 customers across 30 countries (with an operational focus on Europe).
In total its platform has spawn some 50 million pieces of packaging over its five+ year run.
Today it’s announcing a €40 million (~$45.6M) Series B round to fuel its next phase of growth as it eyes expanding its regional operations — including by strategic M&A.
The round is led by Paris-based b2b tech growth fund InfraVia Growth, with participation from PortfoLion, FJ Labs and the European Investment Bank. Prior investors Speedinvest, ProFounders, Market One Capital, Inovo, White Star Capital and business angels also joined the round — which brings Packhelp’s total raised to €52M ($60M).
The startup says the B round is the largest for a business at this stage in Poland and one of the biggest in Central and Eastern Europe. (Another recent chunky round in a similar space is the $45M Series A for Latvia’s Printify this fall — although the latter is focused on custom merch so its customers could, in theory, also be customers of Packhelp’s custom packaging.)
The VC funding follows a $10M Series A Packhelp raised back in March 2019.
Packhelp’s minimum order is just 30 boxes so it’s able to serve microbrands like creators or ecommerce platform sellers as they scale — in addition to larger enterprises like on-demand food delivery giants. Though its business currently skews heavily towards smaller players: At present it says circa 70% of its customers are small companies vs 30% being mid-market & enterprise clients.
“The new round will allow us to put more focus on the latter,” it tells TechCrunch.
The pandemic-induced boom in food deliveries is one factors that looks to have helped fuel Packhelp’s growth.
And it says that expanding to add a SaaS product focused on enterprise companies that run in-house packaging operations will be its next step.
On the growth front it says it grew 2.5x over the past 12 months — and is anticipating growth of “at least 2x” next year.
Its core software is an online editor, called Packhelp Studio, which it touts as automating the design, quality and assurance process for orders — with friction-(and cost)-shaving features such as a library of ready-to-use patterns, shapes and fonts, meaning customers don’t need an in-house designer to turn out some nappy branded packaging for whatever they’re selling.
Packhelp already offers a range of custom packaging — from mailer boxes and bags to food boxes and a variety of product box/tube etc options. But expanding this mix is also part of the plan for the Series B.
Here it points to the boom in so-called quick commerce (aka super speedy urban deliveries of groceries and other convenience items) as one area it’ll be seeking to tap into through a beefed up product line-up. And investors have certainly been pouring dollars into puffing up regional on-demand convenience plays since the pandemic struck…
Tweaking its products so it can also offer more affordable options is another focus.
And it says it wants to add new services — including around “sustainability” (see below).
Expanding and deepening its operations in Europe is another focus — hence eyeing strategic M&As to help with growth.
“We want to strengthen our position in key markets by becoming closer to our customers through opening local hubs,” it says on that. “This will make our processes better and more transparent, cut lead time to even the most remote locations, offer better pricing, localise our product lineup and finally build local supply chains to reduce carbon emissions created during transit.”
“We will take the first steps to global expansion too but the focus right now is on Europe,” Packhelp adds.
Asked what it’s eyeing for M&A it also told us: “Our M&A efforts are mostly supporting our mission to be closer to our customers. We are looking for companies that will help us deliver on our strategic plans faster and increase our tech advantage, especially around process and design automation. We will approach any M&A proposition carefully though as we are bullish about keeping our company culture intact and staying on top of our mission.”
What does ‘sustainable packaging’ mean?
Developing new “sustainable products and services” is another major touted focus for Packhelp’s Series B.
But whether or not there ends up being real substance here — vs marketing greenwashing — remains to be seen.
The climate emergency has dialled up attention on global supply chains. And, indeed, on the whole wasteful, resource-requiring packaging business itself. So, on sustainability, Packhelp may be looking over its shoulder at the prospect of increased scrutiny plus a new wave of startup competition packing shinier environmental credentials — and feeling the need to update its offering.
Back in September, for example, Index Ventures led a $12.2M seed round in another packaging-related startup, Sourceful — which describes its focus as “sustainable sourcing”. And there have been a whole raft of supply chain transparency/sustainability startups popping up in recent months — touting enhanced data and benchmarking around product suppliers — which could, eventually, put the squeeze on sustainability ‘greenwashing’.
At the time of its seed raise, Sourceful was also slating a forthcoming design capability which it said would help businesses fully customize packaging while simultaneously applying a sustainability lens — by presenting them with real-time data on potential carbon emissions related to their design choices.
So — tl;dr — it could soon be the case that ‘custom packaging’ means a lot more than just getting a design of your liking and the right color paint slapped on the cardboard; it’ll be about who can most credibly shrink the associated carbon footprint — to the tiniest possible quantum — and still help get a product delivered intact to a happy customer.
In Europe, meanwhile, incoming regulations are set to expand sustainability reporting requirements for large companies — meaning enterprises will necessarily be doing more interrogating of their supply chains to meet these environmental audits.
The global supply chain crunch that’s been affecting a number of industries in recent months (including as a result of the pandemic) is another factor that’s likely driving demand for increased visibility around supply chains, more generally.
But climate breakdown drives natural disasters which can also affect supply chains. So you certainly can’t remove supply chain resilience from wider considerations about the environments they operate in.
Packhelp says its planned SaaS solution for enterprises will not only seek to “digitise and modernise a stagnant industry that relies on outdated, ill-fitting tools and still largely runs over email”, as it puts it — but says the forthcoming “smart management software” will help customers “streamline and optimise internal workflows” to better manage their relationships with packaging suppliers.
It further suggests it will be able to use its “technical knowledge and industry know-how” to give enterprise clients a better understanding of price and lead time behaviour (and thereby “help improve supply chains that are facing unprecedented challenges and turmoil”).
A verified base of “sustainable packaging suppliers” — plus features that help measure carbon footprint and offset impact — will also be central to the SaaS solution, it suggests.
However a key challenge for packaging platforms generally is that packaging itself uses resources and expends energy on something that feels inherently wasteful — as it’s typically disposable and most likely instantly thrown away (or at best recycled) after use. All of which generates carbon emissions — before you even consider how packaging availability may support growth of wasteful convenience ecommerce (which in turn amplifies demand for more packaging). So how much credibility a claim of “sustainable packaging” can have is worth consideration.
The circular economy would prioritize packaging reuse vs recycling — not to mention longevity of products vs quick, impulse-buy driven commerce — and there’s little sign of that being anywhere close to being delivered at scale as yet.
Asked about the problem of packaging being wasteful, Packhelp argues that entirely eliminating packaging for ecommerce use-cases risks creating more waste than it would remove — i..e. if products arrived broken/damaged etc.
Instead it argues that sustainability in this context will come to mean “customisable packaging, that is designed with a specific product” — meaning it’s made for exactly the shape and size of the product being shipped; so would therefore “use significantly less packaging than the one-size-fits-all box approach currently adopted by the major ecommerce companies whilst also offering better protection for the product”, per Packhelp’s claim.
“In our view, customisable packaging designed to fit the dimensions of a product, can not only reduce cardboard usage by 10-30% per item shipped (as items are tightly packed, not sitting in a box much larger than the item), but it can also reduce the volume of cargo bulk required in a carbon-heavy cargo plane or truck,” it suggests, also arguing: “This means that the transport element of ecommerce can be made more sustainable by customising packing to a specific item, as fewer planes and trucks are required across the supply chain, as packaging sizes are optimised.”
Packhelp further claims it’s working to increase “sustainability” across its marketplace by bumping up the proportion of (all) packaging items sold via its platform that use recycled material.
Although last year this was only 65% (albeit it’s quick to claim that 92% of the packaging it sold was capable of being recycled after use; not that that means it was, though).
It also points to a consultancy service it currently offers to (a sub-set of paying) customers (on its Plus tier) — which it says provides them with support to minimize packaging waste with their orders. Expanding access to this service is on the cards — in another of its planned ‘sustainability’ tweaks.
Packhelp does say it wants to go further — saying it’s set itself the goal of conducting an environmental audit of all packaging items on its marketplace — and, ultimately, introducing carbon-neutral packaging (at some unspecified future point).
It says it has begun this environmental audit process — which entails gathering info from suppliers on its marketplace; with a first focus on best-selling packaging items — and will publish the first results of the audit in Q1 2022, with implementation slated to follow “shortly after”.
“As a result of the audit, we will know the average carbon and water footprint of a certain packaging item ordered with Packhelp. This information will be available to clients on the product page so it is visible before they make a purchase and we hope this will drive our customers to become more environmentally conscious when choosing their packaging,” it tells TechCrunch.
“We already see a lot of our customers adding information about certain eco-properties of their packaging ordered via Packhelp in our virtual editor. For example, there is an icon to demonstrate that this packaging type is recyclable, or that it was made out of recycled content. We hope this trend will continue and our customers will continue to share further information about the carbon and water footprint of the packaging they’re using to customers,” it adds.
What about carbon neutral packaging? How does it propose to deliver on that claimed ambition?
“This will be mainly done through closer co-operation with our suppliers, opting for green energy and cutting emissions caused by the transport of our packaging,” it says, without specifying how reductions in emissions will sum to the claimed goal of zero emissions. (Although it adds: “At this point, we’re not excluding the idea of using carbon offsetting, as a complementary measure to lowering the carbon footprint.”)
“This project will be carried on by our soon to be appointed sustainability team,” it continues of this nascent component of its plan, adding: “As soon as we have a detailed roadmap in place, we will be sharing the information with our customers.”
Packhelp has an existing partnership with tree planting charity, OneTreePlanted — in order that its customers can tout carbon offsets related to production of the packaging that their customers see — saying that, so far, this has resulted in 15,000+ trees being funded and planted via its platform.
So, over around 100 years, those trees might be able to suck up ~15,000 tonnes of carbon dioxide — assuming (of course) that they survive that long (NB: Climate change driven droughts and forest fires as well as increased demand for natural resources like tree pulp to produce stuff like packaging is, sadly, making survival hard for the humble tree.)
However green campaigners have repeatedly warned that carbon offsets alone don’t work.
What’s actually required to reduce emissions and tackle the climate emergency is a radical reduction in consumption — right here and now (or, well, yesterday). Or as Greenpeace put it succinctly last year: “Carbon ‘stored’ in trees or other ecosystems is not the same as fossil carbon left underground.”
So Packhelp’s talk of “sustainability” — whilst it’s simultaneously drumming up demand for and growth of emissions-generating on-demand consumption by providing the cheap packaging that enables scores of wasteful micro deliveries; not to mention its plan to make its custom packaging even cheaper so it can further grow orders — needs a lot more robust scrutiny than merely looking to see if there’s a recycled logo printed on the box to score its marketing claim on the greenwashing scale.
Or, to put it another way, fiddling round the edges of a terminally polluting system won’t avert climate disaster. Indeed, some might argue that by making claims of “sustainability” without delivering the kind of systemic change that will actually reduce consumption suggests you are — far from being sustainable — complicit in sustaining the current global catastrophe.
This article was originally published on TechCrunch.com. Read More on their website.