What we do -and don’t know- about La Nevera Roja’s acquisition by Rocket Internet

Rocket Internet has confirmed the acquisition of Madrid-based food delivery startup La Nevera Roja. In this article we share what we know and don’t know about one of the biggest exits in Spanish history.

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The deal is official: Rocket Internet has acquired Madrid-based food delivery startup La Nevera Roja (LNR), as well as Italian company Pizzabo, other smaller startups in emerging markets (mostly in Asia) and a 30% stake in Delivery Hero for €496 million.

According to a statement from Rocket, they plan to create a ‘Global Online Takeaway Group’ combining all of the assets above and Foodpanda, a food delivery juggernaut that could already be bigger than Just Eat or grubHub.

What Rocket has not confirmed is the price of La Nevera Roja’s acquisition. However, a lot has been published in recent days about the deal, mostly since Rodolfo Carpintier first mentioned it on his Baquia blog.

To help people understand what La Nevera Roja was, is and might become, we’ve put together a list of what we know and don’t know about the 4 year old company founded by José del Barrio and Íñigo Juantegui.

What we know about La Nevera Roja’s acquisition

The items included below have not been confirmed by either Rocket or La Nevera Roja (who has been pretty quiet since the news broke), but Novobrief understands that they are true or very close to the truth.

Fundraising

La Nevera Roja had raised close to €10 million from various investors. The list includes business angels who supported the company at the beginning (Pablo Juantegui, CEO of food chain Telepizza and father of Íñigo; Eduardo Díez-Hochtleiner, vice-president of 20minutos.es; Jesús García Lecuona, co-founder of Navision Software, which was acquired by Microsoft) and other firms.

Nicolás Luca de Tena (a popular businessman in Spain associated to the media industry) also backed the company at the early stage. In 2014 he would once again invest in the company, leading a €2 million round.

Other investors in La Nevera Roja include Ad4Ventures, a subsidiary of media empire Mediaset. Interestingly, Mediaset did not give LNR any cash, opting instead for a media for equity deal. This helps explain why LNR was on Spanish television a lot in recent times.

As Hemerotek reported, Caixa Capital Risc gave LNR some money via a convertible note. But the venture arm of LaCaixa never became investors in the company, as LNR paid the loan back.

Novobrief understands that this is how much of the company the investors and founders owned:

  • Co-founders (Íñigo and José): 30%
  • Nicolás Luca de Tena: 30% or even a bit higher
  • Mediaset: 10%
  • Other business angels and unknown people: 30%

How much did Rocket paid for La Nevera Roja?

This is the key question and there’s no official answer to it. Rodolfo Carpintier said on Monday that Rocket had paid €80 million for the company, and we understand that’s correct.

Since the deal broke, many have asked if it was a cash only deal or if it also involved Rocket’s (or Foodpanda’s) stock. In a tweet Rodolfo said there was no stock involved and it was all cash.

At Novobrief we understand this is somewhat correct, although some have claimed that there might be a small portion of Rocket’s stock involved in the deal.

How big was La Nevera Roja’s business?

Another key question that has no easy -or official- answer. The company has never disclosed its revenues and nor has Rocket.

However, we do know some pieces of information that might help people have an idea of how big LNR’s business was.

  • In his article, Rodolfo Carpintier said that the €80 million price tag meant a 40X sales multiple. It’s worth noting that he never explained if this meant pure sales (the whole price paid by customers who ordered food on the site), gross revenues or even net revenues. Whatever the case, and if that number is correct, it’s a very significant multiple.

  • According to an article published on Cinco Días this week, LNR generated €40 million in sales to restaurants in 2014. We don’t know where this number comes from, but if correct, it would mean that Rodolfo was talking about LNR’s net revenue (€2million, commission charged by LNR to the restaurants it operates with).

  • In an official presentation published today by Rocket Internet, the startup incubator claims that the Spanish company only operated in one market (Spain), it worked with 4,000 restaurants, it had 560,000 users and 1.4 million annual orders.

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  • Here goes a back-of-the-envelope calculation: if we suppose a 30 euro average delivery for LNR (it’s just a guess!), that would bring LNR’s annual sales to about €42 million (1.4 times 30), close to Cinco Días’ number.

  • Rodolfo also said in his article that LNR was not yet profitable, which we understand is correct.

  • As of December 2014, the company had 40 employees based in Madrid.

Is La Nevera Roja bigger than Just Eat in Spain?

Again, nobody knows. Just Eat entered the market before La Nevera Roja and it even acquired Sin Delantal in 2012 for just €3 million. Tracking both company’s growth since then is tough, since very little public data is available.

Interestingly, in a press release from Rocket published today, the company does not describe LNR as the true leader in Spain (or anything in those terms), simply saying that they are “one of the leading companies in the online takeaway market”.

Rocket’s deal has one more Spanish angle

Buried in Rocket’s press release is the announcement that Foodpanda (which operates mostly in Asia and other emerging markets) has acquired Just Eat India.

How does this involve Spain? Well, Spanish Venture Capital fund Axon Partners Group invested in Just Eat India last year, as the firm announced in this statement.

This means that Rocket’s spree of acquisitions not only signifies a phenomenal return for LNR’s founding team and investors, but also one more exit for Axon.