Cheers to flaschenpost on one of the largest tech exits in Germany
We welcomed flaschenpost (a.k.a “Flapo”) into the Cherry portfolio exactly four years ago. In fact, we came to the final investment decision the day after our firm’s holiday party, believing that there was room for a German market leader in on-demand beverage deliveries. And while some of the anecdotal details of that day are a bit blurry (there may have been some Glühwein and Cherry vodka the night before) one thing is certain:
Our partnership with flaschenpost began on a celebratory note and it ends on one, too.
Four weeks ago, Oetker Group announced its plans to acquire 100% of flaschenpost. The antitrust authorities approved the transaction and the deal is now closed.
But this isn’t just any exit. It represents one of the largest ever exits of a startup in Germany and signifies an important step for the European tech ecosystem as a whole. We sincerely hope this is only the beginning of more M&A activities that are standard in North America, but very rarely happen in the dimension of €500M+ exits to a local incumbent in the European tech landscape.
While we will sorely miss the regular interactions between us and the flaschenpost team — the brainstorming, the WhatsApp threads, the casual check-ins, and even the more formal board meetings — we can’t stress enough how excited we are for everyone involved.
We are honored that founder Dieter Büchl and executives Dr. Stephen Weich, Niklas Plath, Christopher Huesmann, and Julian Pachta plus the entire 7,000+ team let us be a part of their journey from day one.
We at Cherry thank you. We will miss you. But, without further ado, cheers to you!
The past four years
It is beyond impressive what flaschenpost has built since the first van started delivering to its first customers in Münster (Yes, you read that right. Not Berlin. Not Munich. Münster, my hometown.)
In its first few weeks, the company witnessed unprecedented growth. The online shop and operations were almost brought to their limits. People quickly began ordering for their weekend supplies and before big football matches. And Dieter did everything himself —from programming the whole tech stack, to running the warehouse, to hiring all employees, and to, of course, making sure customers received the best products at affordable prices.
The first few weeks were truly impressive. We had never witnessed such traction with a new business before and haven’t since.
Soon, the rest of the team joined — Stephen, Niklas, Christopher, and, most recently, Julian. All of them were already friends to us at Cherry and Niklas had just successfully completed an internship with us.
To the flaschenpost team, since those first few weeks, you have all built a powerhouse in Germany. You managed to attract top talent to a more remote city with an untapped tech base (when compared to the likes of Berlin and Munich) and created a company that grew and opened in new cities at maximum and record paces. In some phases, new city launches occurred every three weeks!
Our board meetings were always full of vibrant discussions and transparent views. What made them truly effective, though, is that the meetings always united very different perspectives that sought to find the best solution to any given challenge waiting around the corner.
An unlikely partnership
From an investor’s standpoint, this investment has always been a bit of a “rare” one.
- Assumption: Never do an early-stage deal facilitated by a banker. So… this investment did indeed come through a banker at a private bank. We took the meeting with flaschenpost’s founder Dieter just to be, well, nice to the banker. Low and behold, we were downright impressed by Dieter, who was already a serial entrepreneur (he was the first to sell ink cartridges online in Europe and had a great exit with that business, too).
- Assumption: Always go asset light. Who would invest in an extremely operational business that requires a fleet of 100 delivery vans per hub and large warehouses that need to be equipped with expensive, top-notch technology (hardware and software)? On top of that, recruiting and managing more than 7,000 employees? All of this goes against a clear VC thesis that almost all investors share. But flaschenpost makes it work and delivers happiness to customers with a stellar 82 NPS. We also believe that going full-stack enabled flaschenpost to build a 100% customer-centric company. As investors in other capital intensive and operationally complex businesses such as Auto1 Group, Flixbus, and Infarm, we at Cherry do not shy away from these types of startups if the founders can show that they are extremely strong in execution.
- Assumption: Embrace high margins and great unit economics. This was the number one counterargument to invest in flaschenpost. We have to admit that we also spent quite some time in our due diligence four years ago trying to figure out how the company would make money in a potentially low-margin market with such high operating costs. The thesis was that with enough density in a city, you would be able to make the delivery tours efficient with the van meeting customers in the same radius. Margins would go up over time with higher purchasing power and the launch of private labels. The flaschenpost team did an outstanding job in launching one private label after another that turned into extremely successful brands enjoyed by customers.
- Assumption: Never invest in a purely German business. Many funds declined to invest in flaschenpost’s Series A after we had led the seed round. One big concern they had was that this would be a purely German business because of our great German bottle deposit system (Germans are not only being big lovers of Apfelschorle, but also of heavy crates of sparkling water). However, the German B2C beverage market is around €25bn and flaschenpost expanded into the B2B market lateron as well. That move made this a €50bn market in total, which is fairly sizeable overall in our view.
- Assumption: Build your company in a tech hub. Most VCs advise founders to build companies where international top talent live as this will make things, especially hiring, much easier. We admit that we still largely agree with this sentiment as the initial top hires were indeed harder to recruit to my beloved Münster. It took a lot of convincing, but once the first two management layers were hired and the consumer brand had gained awareness, this became much easier as people really wanted to become part of the team. They were willing to move to Münster just for that.
Auf Wiedersehen!
Flapo team, we will miss you a lot, but we thank you for letting us be a part of this ride.
But, even more importantly, we also thank you and Oetker Group for the example you’ve set for the larger German and European startup ecosystems. It’s no easy feat to catch the attention of an international food and beverage conglomerate in a year — of all years! — a global pandemic created obstacle after obstacle.
It’s encouraging to see a much larger, more traditional corporation take notice of the difference digitization can bring and realize the power collaboration can create. It is necessary — across the ecosystem — to grab the opportunities that are out there to build out new, more innovative and tech-driven business lines.
This “thank you,” of course, also goes to all our great co-investors and business angels that partnered with us over the past four years and made the flaschenpost story a success story.
We hope this headline is simply the first of many more like it in Germany in particular and Europe overall.
Prost!
