Ada Ventures’ investment in Huboo
Huboo’s seed round was announced in Techcrunch last month, but we’ve been invested in the company for a year now.
Huboo built proprietary, full-stack, multi-channel fulfilment software and systems, which they now sell to hundreds of e-commerce clients that they service from their warehouse facilities in Bristol. The Covid-19 related lock-down we’re all experiencing has shone a light on this special company and their amazing team.
The uncontested fulfilment market (the market nobody wanted or could afford to work in, until Huboo) is ~£1bn of fulfilment revenues in the UK and another £6bn across the rest of Europe and the US. The wider SMB space, where Huboo also works, is around £27bn in the same territories (£4bn in the UK).
What was the process that led to investment?
In early 2019 a Bath-based angel introduced me to Martin, one of Huboo’s two founders. At that time Check and I were investing from a syndicate that we ran, ahead of closing our fund. We introduced Martin to a few seed funds that we like to work with and quickly co-invested (via our syndicate) with our friends at Episode 1.
The business grew rapidly. Very rapidly in fact. There was clearly a massive gap to fill: serving smaller e-commerce businesses with fit-for-purpose fulfilment software. Think FBA, but with real customer service and a software-driven product that powers revenue growth in the underlying customer businesses.
Why does Huboo fit the Ada Thesis and what got us excited?
- Long-tail e-commerce is an overlooked market. Fulfilment and logistics software is a well covered sector, but until Huboo, no-one successfully focused on smaller businesses — their needs and unique requirements were going totally unmet. Small businesses are the growth engine of any developed economy, and those selling digitally even more so (side note: especially now in these strange times). The opportunity Huboo stepped into was building a product specifically for these companies, and supporting their growth. Small e-commerce businesses often hit a revenue growth ceiling when they can’t increase their pick/pack/ship capacity. When that’s the case, Huboo enables them to continue to grow by outsourcing this function along the lines of Fulfilled By Amazon (FBA). Having priced themselves into the entirely uncontested micro-business market, Huboo now appears to have made themselves irresistible to the larger SMB market.
- The product economically empowers an overlooked segment of the population who may not have access to 9:5 work. When we spoke to customers we heard stories of business owners that, after implementing Huboo, were able to take holidays for the first time in years, address childcare issues, and other real human issues; as well as the more obvious financial benefits of cost savings and increased growth.
- Distribution/fulfilment workers are essential to our future economies and should be empowered. E-commerce is eating retail, but the problems at Amazon, and other large fulfilment firms are well documented, and staff in their warehouses appear to struggle with aspects of the work. One of the Huboo founders’ great insights was that in redesigning the way fulfilment works, warehouse staff can be empowered to have much more satisfying workdays and careers. At Huboo, the warehouses are divided into hubs (product shelves, packing desk, terminal), and the Hub Manager is enfranchised with responsibility for all clients they serve through that hub. This leads to a direct relationship between the Hub Manager and her/his clients, creating a powerful feedback loop that gives a Hub Manager a genuine sense of ownership and responsibility. This simple fact is so powerful that it leads to happier staff that are aligned with the company they work for and the clients they serve.
- Technology is the key. Huboo is the result of two friends with very complementary backgrounds and minds. Martin, the CEO, is a serial tech founder; and Paul, CTO, worked at P&G for over 20 years, ultimately managing large parts of their tech-enabled supply chains. Paul and his team built Huboo’s software from scratch, and no third party software has been used.
The situation we all find ourselves in is unprecedented (sorry!). Huboo is now an even more valuable partner to its customers and, ultimately, to all of us at home ordering our goods online. Current trading and continued growth at Huboo, during lock-down, has shown us how essential e-commerce businesses are to maintaining some normality of modern life, and economic activity. Huboo’s software and systems now serve hundreds of SME clients, processing millions of transactions and it’s our belief that a hugely valuable company is being built in Bristol.