Sides: digitising the value chain of restaurants and delivery services. Why we invested.

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Sides: digitising the value chain of restaurants and delivery services. Why we invested.

Jul. 16th, 2021

On the 13th of July, our Venture Capital team proudly announced our investment in the Berlin-based tech company Sides, which provides cloud-based operational software stack to restaurants, ghost kitchens and e-grocery businesses. The €10m Series A round was led by German early stage tech VC Cusp Capital and marks Fortino Capital’s first investment in Germany, a flourishing ecosystem to which we are very keen to contribute. 

This article summarizes our investment thesis, which is centred around our conviction about the team, product and market.

The Founding team: tech entrepreneurs with a proven track record as pioneers in the restaurant industry

Sides’s founding team comprises of Björn Wisnewski (CEO), Ronny Roland (CPO) and André Wenzel (CTO). Björn has very strong commercial sense and under his leadership the company bootstrapped to the leading software partner for restaurants in Germany while creating strong commercial momentum outside of Germany as well.

Ronny and André jointly lead the tech part of the company and have a track record as pioneers in the industry. André has developed PoS systems for restaurants in Germany for more than 25 years and created the first API connection with food delivery platforms like Lieferando and Delivery Hero. Moreover, in close collaboration with Burgerme (a local German burger food chain) they developed the first complete delivery management solutions, which enabled restaurants to take control over the client relationship as well as the economics of food delivery by insourcing delivery management.

In 2019, Björn recruited Matthias Baroke, the former Field Sales Manager of Delivery Hero in Germany, who together with his team scaled Delivery Hero from 4,000 to 23,000 clients in Germany. Matthias is currently leading Sides’ sales efforts in DACH.

While the team is nicely complementary from a hard skill perspective, they are equals when it comes to the corporate values they embrace and the drive they have to make Sides win at a European level and beyond.

The product: a superior offering with ample opportunities to add adjacent products and services

Sides’ offering comprises of 10 modules that enable restaurant owners to enhance their client relationships and digitize digitise their way of working, which creates cost savings and provides new revenues opportunities.

Here is an overview of Sides’ value add across the restaurant workflow:

Through its deep integration across the workflow, Sides aggregates a wealth of relevant data, which provides ample opportunities to enrich its offering with adjacent, analytics-driven products and services, such as data-driven (automated) marketing, customer demand forecasting, and data-driven supplier management.

However, on the back of their brand recognition and track record – particularly in the German market – the greatest proof of the attractiveness of Sides’ product suite is that they acquire over 90% of their new clients through inbound traffic.

The market: a wave of digital transformation in the European restaurant industry

The European market comprises over 800k physical restaurants with Italy, France, and Germany holding over 130k restaurants each and giving them the largest restaurant populations.

To illustrate, assuming the average restaurant pays €2k per year for operational software, which is just a fraction of the commission an average restaurant currently pays to the food delivery platforms, the annual revenue opportunity is more than €135m at a 15% market share only considering France, Italy, and Germany. For Sides, we ultimately see a global opportunity with revenues being generated beyond license fees.

In addition to physical restaurants, part of Sides' product suite is highly relevant for e-restaurants (also known as dark or ghost kitchens) and e-grocery businesses as well. These are two relatively new segments that have been growing rapidly on the back of customer demand for online food ordering and significant VC money being deployed. The Spanish food delivery company Glovo, for example, raised €450m in March ’21, while German-based e-grocery company Gorillas raised  US$290m in March ’21, and US based dark kitchen company CloudKitchen raised €400m in Nov ‘19.

Sides recently acquired its first few customers in both of these segments and with the expected continued momentum for online food delivery, we expect many more new companies to appear, providing Sides with many additional partnership opportunities.

At Fortino Capital we are grateful to Björn, Ronny, and André for providing us the opportunity to prove ourselves as a partner, and we are very excited for the journey ahead – Onwards!

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