Portfolio April 13 2021

Berlin’s subscription tech-rental Grover raises €60 million in Series B round

Berlin-based consumer tech-subscription service Grover has raised €60 million in an oversubscribed Series B round. The round was led by JMS Capital-Everglen and saw participation from Viola Fintech, Assurant Ventures, Augmentum Fintech, Circularity Capital, Seedcamp, Samsung Next, and a number of unnamed founders and angel investors. The €60 million is comprised of €45 million in equity from investors and €15 million in venture debt financing provided by Kreos Capital. The funding is expected to propel market penetration, improve product innovation and accelerate international expansion, primarily into Spain and U.S. markets. Founded in 2015 by Michael Cassau, Grover enables consumers to rent technology on a monthly basis as opposed to buying it. In addition to the convenience of the service, Grover doubles down on its offering by way of recirculating the tech, thereby providing a sustainable alternative to the traditional buy it, use it, throw it away, model. Driven by a year when tech at home became a dominant factor in everyone’s lives, Grover experienced year-over-year growth of 2.5x and net revenues of €37 million for the fiscal year. Based on these figures, Grover reports that 4,000 metric tonnes of CO2 were saved due to device recirculation. “Now more than ever, consumers value convenience, flexibility and sustainability when they shop for and use products. This is especially true when it comes to technology and all of the possibilities that it has to offer — whether that’s productivity, fun, or staying in touch with our loved ones,” comments Grover CEO and founder Michal Cassau. “We’re still just scratching the surface of a €1 trillion global market.”

Portfolio April 8 2021

Norway’s Kolonial rebrands as Oda, bags $265m on a $900m valuation to grow its online grocery delivery business in Europe

Food delivery startups, and specifically those focused on grocery delivery, continue to reap super-sized rounds of funding in Europe, buoyed by a year of pandemic living that has led many consumers to shift to shopping online. Today, the latest of these is coming out of Norway. Kolonial, a startup based out of Oslo that offers same-day or next-day delivery of food, meal kits and home essentials — its aim is to provide “a weekly shop” for prices that compete against those of traditional supermarkets — has raised €223 million ($265 million) in an equity round of funding. Along with that, the company — profitable as of this year — is rebranding to Oda and plans to use the money (and new name) to expand to more markets, starting first with Finland and then Germany in 2022. CEO and co-founder Karl Munthe-Kaas confirmed to TechCrunch in an interview that the funding values Oda at €750 million ($900 million) post-money. The market for online grocery ordering and delivery is gearing up to be a very crowded one, with hundreds of millions of dollars being poured by investors into the fuel tanks of a range of startups — each originating out of different geographies, each with a slightly different approach. Oda believes it has the right mix to end up at the front of the pack. “We have found ourselves in a unique position,” Munthe-Kaas said in the interview with TechCrunch. “We have built a service targeting the mass market with instant deliveries and low prices, because if you want to capture the full basket for the family, you can’t be a premium service. We’ve done that, and we’re profitable.” And now, it will have the backing of two e-commerce heavyweights for its next steps. SoftBank’s Vision Fund 2 and Prosus (the tech holdings of South Africa’s Naspers), are co-leading the round, with past backers Kinnevik and a strategic investor, Norwegian “soft discount” chain REMA, also participating. The funding is a big leap for Oda (the name is not officially going to come into effect until the end of this month, although the company is already describing itself with the new brand, so we’ll follow that lead). PitchBook data notes that before this round, Oda had only raised about $96 million, and its last valuation was estimated to be just $178 million in 2017. 50 supermarkets in one place The company has certainly come a long way. Founded in 2013 by 10 friends, Kolonial originally seemed to have a more modest vision when it first started out: Kolonial in Norwegian doesn’t mean “colonial” (a connotation Munthe-Kaas nevertheless said the startup wanted to avoid, one big reason for the change), but “cornershop.” These days, Oda is focused more on competing against large supermarkets — its average order size is $120 — yet with a significantly more efficient cost base behind the scenes. It’s also been helped by the current climate. Online grocery shopping has been growing and maturing for a while now, but the last year has been a veritable hothouse in that process: COVID-19, shelter in place orders and a general desire for people to keep their distance all compelled many more consumers to try out online grocery shopping for the first time, and many have stuck with it. “We have seen a significant inflection point with grocery over the last year with the market transitioning online, accelerated by COVID,” said Larry Illg, CEO of Prosus Food, in a statement. “Oda’s leadership and impressive growth in Norway paired with its ground-breaking technology and ambition to scale across Europe and beyond makes them an ideal partner to tackle the grocery opportunity over the coming years.” Oda has over the last eight years grown to become the sector leader in a category it arguably helped define in its home country. It was profitable in 2020 on revenues of €200 million, and it currently controls some 70% of Norway’s online grocery ordering and delivery market based on its own particular approach to the model. That model involves Oda building and controlling its own supply chains, from producers to consumers (no partnerships with third-party physical retailers where Oda powers their services), producing several of the products itself (such as baked goods) to order, and using centralized fulfillment centers to manage orders for large geographies. “Centralized warehouses means 50 supermarkets in one location,” Munthe-Kaas said, adding that this also makes the business significantly greener, too. Those fulfillment centers, meanwhile, are operated at “extreme efficiency”, in his words. Oda’s grocery item picking averages out at 212 units per hour — that is, the amount of items “picked” for orders in a week divided by the number of labor hours in a week. The next closest UPH number in the industry, Munthe-Kaas said, was Ocado in the U.K. at 170 UPH, and the norm, he added, was more like 100 UPH, with physical store picking (where customers select items from shelves themselves) averaging out at 70 UPH. All of this translates to much more cost-effective operations, including more efficient ordering and stock rotation, which helps Oda make better margins on its sales overall. Munthe-Kaas declined to go into the details of how Oda manages to get such high UPH numbers — that’s competitive knowledge, he said — noting only that a lot of automation and data analytics goes into the process. That will nevertheless be music to the ears of SoftBank, which has had a complicated run in e-commerce in the last several years, backing a number of interesting juggernauts that have nonetheless found themselves unable to improve on challenging unit economics. “Oda’s leading position in Norway is a testament to the merits of its bespoke and data-driven approach in offering a personalised, holistic and reliable online grocery experience,” said Munish Varma, managing partner for SoftBank Investment Advisers, in a statement. “We believe that Oda’s customer-centric focus, market-leading automation technology and fulfillment efficiency are a winning combination, and position Oda for success in scaling internationally for the benefit of customers and suppliers alike.” The big challenge for Oda going forward will be whether it can transplant into further markets its business model as it has been developed for Norway. Oda will not only be looking for customer traction for its own business, but it will be doing so potentially against heavy competition from others also looking to expand outside their borders. There are other online supermarket plays like Rohlik out of the Czech Republic (which in March bagged $230 million in funding); Everli out of Italy (formerly called Supermercato24, it raised $100 million); Picnic out of the Netherlands (which has yet to announce any recent funding but it feels like it’s only a matter of time given it too has publicly laid out international ambitions); and Ocado in the U.K. (which has raised huge amounts of money to pursue its own international ambitions). And there is also the wave of companies that are building more fleet-of-foot approaches around smaller inventories and much faster turnaround times, the idea being that this can cater both to individuals and a different way of shopping — smaller and more often — even if you are a family. Among these so-called “q-commerce” (quick commerce) players, covering just some of the most recent funding rounds, Glovo just last week raised $528 million; Gorillas in Berlin raised $290 million; Turkey’s Getir — also rapidly expanding across Europe — picked up $300 million on a $2.6 billion valuation as Sequoia took its first bite into the European food market; and reportedly Zapp in London has also closed $100 million in funding. Deliveroo, which went public last week, is also now delivering groceries (in partnership with Sainsbury’s) alongside its restaurant delivery service. These, ironically, are more cornershop replacements than Oda itself, and Munthe-Kaas said he sees them as “complementary” to what Oda does. Indeed, Munthe-Kaas remains very committed to the basic rulebook that Oda has lived by for years. “You need to beat the physical stores on quality, selection and price and get it home delivered,” he said. “This is a margin business and the only way to optimize is to be completely relentless.” But he also understands that this might ultimately need to be modified depending on the market. For example, while the company has not worked with other retailers in Norway — even the investment by REMA is not for distribution but for better economies of scale in procuring products that REMA and Oda will sell independently from each other — this might be a route that Oda chooses to take in other markets. “We’re in discussions with several other retailers, wholesalers and producers,” he said. “It’s important to get sourcing terms and have upstream logistics, but there are many ways of achieving that. We are super open to making partnerships on that front, but we still think the way to win is to run the value chain.”

Portfolio March 31 2021

ProQR prices $90m underwritten public offering of ordinary shares

ProQR Therapeutics N.V. (Nasdaq: PRQR), a company dedicated to changing lives through the creation of transformative RNA therapies for inherited retinal diseases (IRDs), today announced the pricing of its previously announced underwritten public offering of 13,846,154 ordinary shares at a price to the public of $6.50 per share. All of the shares are being offered by ProQR. In addition, ProQR has granted the underwriters a 30-day option to purchase up to 2,076,923 additional ordinary shares at the public offering price, less underwriting discounts and commissions. Gross proceeds from the offering are expected to be approximately $90 million, assuming no exercise of the underwriters’ option to purchase additional shares. Citigroup and Evercore ISI are acting as joint lead bookrunning managers for the offering. Stifel and Cantor are acting as joint bookrunning managers for the offering. JMP Securities is acting as lead manager and H.C. Wainwright & Co. is acting as co-manager for the offering. The offering is expected to close on April 2, 2021, subject to customary closing conditions. A shelf registration statement on Form F-3 relating to the offered ordinary shares was filed with the Securities and Exchange Commission (SEC) on November 7, 2018, which was declared effective on November 19, 2018. A preliminary prospectus supplement relating to and describing the terms of the offering has been filed with the SEC. When available, copies of the final prospectus supplement and the accompanying prospectus relating to the offering may be obtained from Citigroup Global Markets Inc., c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717, or by telephone at (800) 831-9146, or by email at prospectus@citi.com; Evercore ISI, Attention: Equity Capital Markets, 55 East 52nd Street, 36th Floor, New York, NY 10055, or by telephone at (888) 474-0200 or by email at ecm.prospectus@evercore.com; Stifel, Nicolaus & Company, Incorporated, Attention: Prospectus Department, One Montgomery Street, Suite 3700, San Francisco, CA 94104, by telephone at (415) 364-2720 or by email at syndprospectus@stifel.com; Cantor Fitzgerald & Co., Attention: Capital Markets, 499 Park Avenue, 6th floor, New York, NY 10022, or by email at prospectus@cantor.com. You may also obtain these documents free of charge by visiting the SEC’s website at www.sec.gov. This press release shall not constitute an offer to sell or a solicitation of an offer to buy these securities nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. About ProQR ProQR Therapeutics is dedicated to changing lives through the creation of transformative RNA therapies for the treatment of severe genetic rare diseases such as Leber congenital amaurosis 10, Usher syndrome and retinitis pigmentosa. Based on our unique proprietary RNA repair platform technologies we are growing our pipeline with patients and loved ones in mind.

Portfolio March 30 2021

Hubuc links with CurrencyCloud

The next generation banking-as-a-service platform, HUBUC, has partnered with fintech Currencycloud to support HUBUC’s business customers with seamless cross-border payments, employee to employer payments, access to a digital multi-currency account and real-time wholesale foreign exchange rates. HUBUC is an embedded financial services provider that offers multiple payment capabilities from a single platform. Through this partnership, HUBUC business clients can access Currencycloud’s leading foreign exchange rates (38 currencies) and international payments across Europe. They will also be able to use Currencycloud’s infrastructure to quickly access virtual named accounts for their customers, with the ability to collect, convert, pay, and manage multiple currencies simultaneously using Currencycloud’s Spark solution. According to research1, 45% of CFOs stated that they are either expanding their companies globally or are planning to do so within the next year. Currencycloud’s agile technology can facilitate international expansion, allowing businesses to pay customers and suppliers with local accounts and access real-time competitive FX rates. Nick Cheetham, Chief Revenue Officer at Currencycloud, said: “Embedded finance is reshaping international business payments - and HUBUC is an ideal use case for enabling business growth across borders. Thanks to our partnership with HUBUC we’re helping businesses to expand into international markets and provide financial services to their customers across the globe.” Hasan Nawaz, co-founder and CEO, HUBUC, said: “We knew that when it came to services as important as cross-border transactions - particularly in a post-Covid world of increased international trade - we needed an experienced and proactive partner onboard. Thanks to Currencycloud’s services, our customers can now open additional accounts without becoming regulated or applying for licenses themselves. This way, if we have a client that needs to offer international payroll, for example, it’s easy for employers to pay employees abroad in another currency.” HUBUC enables companies to incorporate a number of payment capabilities into their offering, from onboarding and payments to FX and card issuance. It offers companies the convenience of having just one API, just one contract, and no regulatory requirements, meaning companies don’t have to sign up to multiple different contracts and multiple APIs. It also helps them bring payment services online much faster than existing methods.

Portfolio March 25 2021

European branded payments startup Recharge raises $11.8m debt round led by Kreos Capital

Online branded payments now run the gamut of anything from Spotify vouchers, Netflix vouchers, Neosurf, PaySafe cards, and everything in between. Consumers use them to pay for a variety of things. In Europe, they are an increasingly big business. Now, European branded payments fintech Recharge.com has raised €10 million ($11.8 million) in a debt funding round led by London-based Kreos Capital, a growth debt provider for high-growth companies. In 2019 the Dutch startup (formerly Creative Group) took investment of €22 million from Prime Ventures. Recharge has also appointed Michael Kent — who previously founded payments companies Small World and Azimo, along with U.K. neobank Tandem — as its non-executive chairman. Recharge.com says it plans to use the funding to extend its mobile offering, product range and expand in regions such as North America, Latin America and the GCC. It’s also aiming for sales of €450 million in 2021. Günther Vogelpoel, CEO of Recharge.com, said in a statement: “We live in a world of instant wish fulfillment, from taxis that appear on demand to same-day delivery of consumer goods. Recharge.com gives customers a fast, safe and simple way to fulfill their wishes, whether that’s an essential remittance or access to digital goods and services.” Commenting, Kent said: “The era of supermarket gift cards and mobile top-ups is drawing to a close. Branded payments have exploded during the global lockdown as consumers seek digital alternatives to the high street. People are now aware that online branded payments are safe, fast, and convenient.” Through a range of digital vouchers from brands including Apple, Google, Spotify, Xbox and PlayStation, as well as cross-border remittances of call, data credits etc., Recharge is attacking the market from the consumer angle. The biggest company in this space is Blackhawk Networks, which is owned by private equity group Silverlake. It’s considered a large player in Europe, which has a direct-to-consumer model. As Kent told me over a Zoom call: “Nobody actually owns the consumer side of this business globally so that’s the big opportunity.”