Growth Weekly #2 - Coffee: Asia's Next Cup of Tea
Also: Eyes Under Cars, France Keeps Growing Strong
Dear Readers,
Hej, Hello, Bonjour.
Here’s your Growth Weekly, with some of the very randomly selected most interesting deals last week in Growth capital.
Enjoy the read, and if you have not already…
This Week’s Grower
🏆 The Top Deal
Flash Coffee (Singapore), raised a $50 million Series B led by White Star Capital, with DeliveryHero, Rocket Internet/Flash Ventures/Global Founders Capital (the Samwer mafia) and Conny & Co also joining the espresso fiesta.
The chain boasts more than 250 stores and 1,500 employees across Southeast Asia in Singapore, Indonesia, Hong Kong, Thailand, Taiwan and South Korea.
Tailwinds
Coffee is increasingly becoming Asia’s cup of tea: according to the International Coffee Organization (yes, the ICO existed wayyy before scammy crypto ICOs tainted the acronym), Asia's coffee consumption has grown by 1.5% per year on average between 2016 and 2021, vs. 0.5% in Europe and 1.2% in the U.S.
Reasons for this newfound coffee culture and passion are clear:
The rise of the local middle class, with urban and Westernized lifestyle aspirations, where coffee is a key component to signal wealth (alongside MacBooks and avocado toasts) and belonging.
Asia is home to very good locally-produced coffee: Vietnam and Indonesia are among the world’s largest coffee exporters due to their colonial past with France and the Netherlands (chart courtesy of Nikkei Asia):
Yet, coffee volumes are still catching up vs. Europe, suggesting ample headroom to grow, according to the ICO data (chart also courtesy of Nikkei Asia):
Headwinds
Some questions on the business:
Lack of (real) differentiation in a fiercely competitive market: coffee tastes (almost) the same everywhere. You are competing against some of the largest and most well-funded coffee/QSR operators in the world, how do you differentiate?
Not tech-enabled: to be clear, this is clearly not a tech-enabled business, but a business powered by real baristas. Consumer/lifestyle businesses should not portray themselves as tech-enabled just because there is an app to order something.
Background
Flash Coffee was launched in 2019 in Singapore by David Brunier, who previously worked at Delivery Hero and Foodora (which certainly explains the Rocket Internet investor base).
The business has grown very quickly since, now operating more than 250 stores, and profitable on its core markets: 100% of its 92 Indonesian stores are making money, according to the Company.
Other competitors are not sitting on the sidelines and are going to work early and properly caffeinated, too:
Starbucks announced in February this year that it will open more than 400 stores across Asia Pacific in 2023, its biggest expansion in the region in five years. The coffee giant already has 5,000 stores in the region.
Malaysian coffee chain ZUS Coffee inaugurated its 100th store back in July 2022, aiming for 180 stores by the end of the year.
McDonald’s announced back in 2021 that it would invest $380 million USD in the Chinese coffee market to grow its presence to c. 4,000 McCafé outlets by 2023 in the country.
Luckin Coffee (yes, you read that correctly) has made it back from the deep and muddy waters of serious accounting fraud, and has reported impressive numbers in Q1 2023, with more than 1,100 new stores opening during over the period. The business is now run by the Chinese PE firm Centurium Capital who has realized a very impressive turnaround, shares are now trading at $22 a piece, vs. $1.4 in June 2020 in the heat of the scandal.
Other Growers
French businesses flexing this week!
Encouraging news on the back of the Choose France forum, where EY announced that the country still tops the European ranking for Foreign Direct Investments!
The Very Personal Podium (VPP)
🥇UVEye (Israel) - a startup building automated car inspections systems for the automotive and security industries. Raised a $100 million Series D led by Hanaco VC, with GM Ventures, CarMax, W.R. Berkley Corporation and F.I.T. Ventures.
Pros: large markets with costly/time consuming human-led inspections, where error can potentially be financially or physically very damaging.
Cons: EV adoption potentially reducing the need for inspections in second-hand sales as 1) less moving parts and 2) lots more sensors/auto diagnostic installed in the cars already.
🥈Worldia (France) - a no-code platform for travel agents and travel professionals to easily design and publish customized travel experiences. Raised a $28 million Series B led by Caisse des Dépôts et Consignation & FrenchFounders, with Cap Horn Finance, Crédit Mutuel Innovation and RAISE France.
Pros: distinguished positioning with curated inventory targeting more upscale segments.
Cons: very competitive industry with thin margins and very large incumbents.
🥉Amino (CA, US) - a digital healthcare guidance platform. Raised a $80 million Series B (+ debt) led by Transformation Capital and Oxford Finance, with North Woodmere Capital, WTI, Red Swan Ventures, and Commerce Ventures.
Pros: ambitious mission to create a single source of truth for American healthcare has access to the same information about access, cost, and quality.
Cons: complexity and opacity of the American healthcare system with domination of private insurers on price making makes that vision very complex to achieve operationally.
The Notable Others
Ripplr (India) - a digital one-stop-shop for all supply chain operations. Raised a $40 million Series B led by Fireside Ventures, with participation from new investors Bikaji and Neo Foods, as well as existing investors 3one4 Capital, Zephyr Peacock, and Sojitz Corporation.
Cullgen (CA, US) - a biotech developing small molecule therapeutics against difficult forms of cancers. Raised a $35 million Series C led by AstraZeneca-CICC Venture (“AZ-CICC”), with Sincere Capital, Voyagers Capital, Wuxi Capital Group as well as existing shareholder GNI Group Ltd.
AccelerComm (UK) - developing a technology which optimizes 5G radio access network performance. Raised a $27 million Series B led by Parkwalk, Swisscom and Hostplus, with participation from existing investors Bloc Ventures, IP Group and IQ Capital.
Wethenew (France) - a rare sneaker resale platform. Raised a $22 million Series B led by C4 Ventures and Chalhoub Group.
Humanscape (South Korea) - a health tech startup with clinical trial data solutions and a pregnancy/parenting app. Raised a $15 million Series C from newcomers Shinhan, Kyobo Securities, Hana Securities, and Mint Ventures, and returning investors Green Cross, Care Labs, and UTC Investment.
Solarea Bio (MA, US) - a biotech using properties of bacteria and fungi native to healthy foods to fight inflammation. Raised a $15 million Series B led by S2G Ventures with participation from Bold Capital Partners, Viking Global Investors, and GG 1978 SICAF SIF.
Edflex (France) - an e-learning content platform provider. Raised a $13 million Series B led by Educapital, with participation from family office Wille Finance, business angel Jean Stéphane Arcis and existing investors Maif Avenir and Arkéa Capital.
Received this from a colleague, or somewhere else (please don’t share too much)? You can click below and see what happens!
Grow healthy (and caffeinated),
Alex