La Nevera Roja ha dado mucho que hablar en España en el último año. La empresa fundada por Íñigo Juantegui y José del Barrio fue comprada por Rocket Internet en Febrero del año pasado por 80 millones de euros.
Exactamente un año después, y como adelantó Novobrief a finales de febrero, la startup de comida a domicilio fue vendida de nuevo, pasando esta vez a manos de Just Eat como parte de una operación que afectaba también a otros negocios de Rocket en Italia, México o Brasil. La compra de las cuatro empresas se cerró en €125 millones.
Just Eat is going to get its hands on the company once founded by Jose del Barrio and Iñigo Juantegui, becoming a de facto monopoly in the Spanish delivery industry with approximately 6 million annual deliveries.
That said, since late 2014 Spain has seen three significant exits -four counting Bodas.net, but very few details were revealed at the time- where we know most of the story, allowing us to make a quick comparison of such acquisitions.
We’ve interviewed Iñigo Juantegui, co-founder of La Nevera Roja. In this Q&A Iñigo explains why they decided to sell, the importance of media for equity investments and gives some tips to founders who are in the process of selling their companies.
It’s important to note that prior to the interview, Íñigo said that he wouldn’t confirm nor deny the numbers that have been published in regards to La Nevera Roja’s acquisition by Rocket.
Were you actively looking to sell?
Not at all, but as you’re probably already aware of, La Nevera Roja’s deal was part of a much bigger movement within the food delivery industry, with acquisitions in Asia, Germany and in other parts of the world.
Did you feel like this was an opportunity you couldn’t reject?
We’re currently leaders in Spain. We could have opted to continue to grow in Spain and in other Spanish speaking markets, because that was our ambition from day one.
However, we saw that the sector was moving towards consolidation very quickly, and we couldn’t compete at an international level with big players and multinationals. In Spain we totally could and can, and we’re still bigger than our main competitors here. But as you can imagine, we’re very happy with the outcome.
When the opportunity presented itself we realized we couldn’t dismiss it. First and foremost, because we’re now part of a group that backs La Nevera Roja’s current team and vision. Which is motivating.
And second, because we’re now part of a company that is present in 64 countries, and we believe we can still learn a lot from our partners.
So now you’re going to just focus on Spain or are you still planning on expanding internationally?
La Nevera Roja stays in Spain and the brand won’t leave the country. Our main objective is to establish our position as market leaders here and to have a monopolistic-like market share.
It’s not uncommon to see market leaders with an 80% market share when it comes to Internet economies, and we want to achieve that. Spain is currently one of the biggest markets for the group, and it’s also one of the most promising ones in the near future.
This is something that the whole company shares, and it’s being reinforced in the past few weeks with Rocket’s acquisition. We don’t expect many changes at the company and our employees will now be able to do things that were not possible before, like spend a few weeks or months at other Food Panda or Rocket subsidiaries to learn how things are done in different cultures and markets.
In terms of fundraising, how important was your father’s support? Was his experience in running a similar company like Telepizza important for LNR’s development?
My father helped us in two main ways: with his support at the beginning, when we were starting the company and we didn’t know much about the industry, but also to make our other shareholders believe that this project was a serious one. When we went to raise funds from business angels and VCs, the fact that we had the support of Telepizza’s CEO helped us. No doubt about that.
But he never got involved in the management of the company and he only helped us when we really needed him.
Media for equity seems to be the talk of the town and more startups are starting to show interest in it. How important was your deal with Ad4Ventures (Mediaset) in terms of growth?
I don’t know the details of other media for equity deals in Spain, but we were lucky to run into Toni Moreno -the person who manages Ad4Ventures- at the right time. I’d say he’s a very reasonable and sincere guy, and he helped us a lot in the process.
The most important thing for us was to separate both concepts: equity fundraising and advertising agreement. I think those two things should always be differentiated in this type of deals. When Mediaset invested in us, they did so by injecting capital (€2.5 million) in La Nevera Roja. It was a proper round of funding.
And then, we also signed a media contract with them. We had to negotiate the deal in a way that would benefit both parties involved; as in, “by letting you invest in the company and giving you a board seat, give us a discount or some other type of advantage”.
But as I said, at the end of the day the key thing is two separate both concepts and to have someone on the other side that understands your business and shares your same values.
Do you think media for equity will become more important for startups in the near future?
I think so, mostly because it represents a clear competitive advantage. Not because you’re on TV (you can always pay for that), but because you’re talking to great media entities and you can take advantage of their knowledge in the field. It’s as if you were hiring a media executive to have him or her in the company. It’s great.
And I have to say it also helped us raise more capital, as many investors saw it as a sign that we were serious about what we were doing.
When you hear people complain about the deal or say that Rocket paid too much for La Nevera Roja, what crosses your mind? What are your thoughts on this?
Every single price is established based on supply and demand. If someone is willing to pay a certain price for something, and the seller is willing to accept it, an agreement is made and the price should be considered as fair.
I have no idea if there’s a bubble in the online world or not, but I do think that no buyer should be disappointed with the purchase of La Nevera Roja, regardless of its price. Mostly because they’re buying a company and product that people like, people want and that is working.
It’s been proved before that this type of companies can have EBITDAs of 40%, and there are not many online businesses that can reach those very same levels.
Yesterday Uber revealed that they’re launching UberEATS in Barcelona, which goes on to show that the food delivery sector is red hot right now. It took many people more than 15 years to realize the potential of this industry, but I don’t think anyone can say that there’s no money to be made in it.
Two years ago, Sin Delantal was acquired by €3 million. Now, you’ve been acquired by much more than that. Did the sector mature that quickly or why do you think there’s such a big difference between both deals?
When Sin Delantal got sold they had six or eight times fewer orders than us. I don’t think our size can be compared to theirs.
This is a business characterized by small purchases but with a very significant degree of recurrence. I think that’s one of the main reasons why it took VCs a long time to back companies like La Nevera Roja and others.
There’s still money to be made at a global level, and I think we’re going to see many more acquisitions and deals in coming years.
Where do you see yourself in five years? Does the investment world attract you?
I have no idea where I will be five years from now.
I do know that I’m not really interested in the investment sector. I’ve thought about it a lot, but I don’t think it’s my field. I don’t think I would be good at it.
I’ve heard from various sources that Rocket was not the only company interested in acquiring La Nevera Roja and you were in negotiations with various players. Looking back, what have you learned from the sale process? Is there anything that surprised you about it?
If you’re selling your company, these are the two main tips I’d give to anyone: hire a good lawyer and hire a good consultant or advisor who has experience.
In our case it was Antonio Sánchez Montero, from Ramón y Cajal, and Axon Partners Group, respectively.
It’s key that those who manage the company are not the ones who have to negotiate with the buyer. Mostly because it’s a very emotional process, with a lot of tension, and I believe it can lead founders or managers to make bad decisions that can hurt the company and its employees. Any small detail might affect the founding team in the wrong way -at the end of the day, they’re the ones who created the company- and you need to realise it’s not only about you, but also about your shareholders, employees, etc.
Many considered the price to be absurd, others still don’t believe that the deal was all in cash (with perhaps a small quantity of Rocket shares) and the vast majority still believe Rocket paid too much.
Who knows if that’s true.
What’s certainly true is that La Nevera Roja has become a very important exit in the history of the Spanish startup scene. One only surpassed by deals that took place in the first wave of Spanish entrepreneurship (eresMas, Olé) and by a handful of others that belong to our time (Tuenti, Milanuncios, eDreams, Infojobs, Softonic or Arsys).
It’s an interesting coincidence that La Nevera Roja’s acquisition took place only three months later than Trovit’s, which was bought by Next CO. for the exactly same amount of money: €80 million.
Two companies that grew in a very different way, based on different models, but that in the end both were able to create a significant amount of value to its founders, investors and the Spanish community in general.
The table below highlights these differences:
There are many paths to exit and the traditional rules of how to create founder/investor value are there to be broken. And they have been smashed.
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.
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.
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.
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
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).
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.
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.
Food delivery startup La Nevera Roja acquired by Foodpanda for €80 million. The Madrid-based startup had raised €10 million from Next Chance Group, Caixa Capital Risc, Mediaset and private investors.
According to Baquia, food delivery startup La Nevera Roja has been acquired by Foodpanda for €80 million. Terms of the deal were not disclosed, but we understand it was mostly a cash deal.
The Madrid-based company, founded by José del Barrio and Iñigo Juantegui in 2011, had previously raised €10 million from Next Chance Group (Nicolás Luca de Tena), Caixa Capital Risc, media empire Mediaset and other business angels and private investors.
This deal represents Foodpanda’s sixth acquisition over the past few years, as the Rocket Internet company continues to expand globally and puts to use the more than $100 million it has raised from the likes of Rocket or AB Kinnevik.
La Nevera Roja was born after Sin Delantal, another Spanish company in the food delivery space that was acquired in 2012 by Just Eat for €3 million. However, La Nevera Roja’s relevance only grew since then -probably surpassing Just Eat-, thanks in part to a media for equity deal signed with Mediaset. The company had net revenues of €2 million in 2014 and was not profitable.
Next Chance Group owned 30% of the shares, Mediaset had a 10% stake, another 30% was still in the hands of the founders (Iñigo and Jose) and the rest was distributed amongst a group of private investors and family offices. Small details aside, very good returns for all parties involved.