Deliverect Must Invoice 67,797 Subscriptions Per Month for Its €12M Valuation

Belgian startup Deliverect just raised €3M from Newion and others.

They make software that connects the terminals from food delivery services like Takeaway.com, Deliveroo and Uber Eats to a restaurant’s cash register.

In its basic package, Deliverect sells subscriptions to its software to restaurants for €39 per month. This connects 1 delivery service to the restaurant’s cash register (+ €10 per month for each additional service).

Valuation

Assume that Deliverect sold a market standard 25% equity stake to Newion.

Then they are valued at €3M / 25% = €12M post-money.

How many subscriptions must Deliverect invoice each month for its €12M valuation?

Exit

Assume this is a (large) seed round.

And assume that Newion wants to make 10x on its winners.

And that they need 2x to compensate for dilution.

Then Newion wants to make a market standard 10 * 2 = 20x on its investment.

And Deliverect needs a €12M * 20 = €240M exit value for its €12M valuation.

Revenue

Assume that Deliverect trades at a market standard 5x trailing 12 months revenue at exit.

And that there is no cash and debt at exit.

Then they need an average of €240M / 5 / 12 = €4M in monthly revenue at exit for their €12M valuation.

Subscriptions

Assume that each restaurant wants to connect 3 delivery services.

Then Deliverect charges restaurants €59 per subscription per month.

And then they must invoice an average of €4M / €59 = 67,797 subscriptions per month at exit for their €12M valuation.

Is that a lot?

NL Multiple

Takeaway.com (thuisbezorgd.nl) states that with 8,000+ restaurants, they are the market leader in food delivery in The Netherlands.

Assume no growth.

And assume that for 80% of these restaurants Deliverect is 10x better than the restaurant’s current solution for dealing with multiple delivery services — retyping each online order into their cash register.

Then Deliverect has 8,000 * 80% = 6,400 prospects in The Netherlands.

Assume that, given the big pain they solve, they have a 50% market share at exit.

Then they have 6,400 * 50% = 3,200 customers in The Netherlands.

Assume that each customer buys 1 subscription (for 3 delivery services) per month.

Then Deliverect will invoice 3,200 * 1 = 3,200 subscriptions per month in The Netherlands.

They must invoice an average of 67,797 subscriptions per month at exit for their €12M valuation.

So they must invoice 67,797 / 3,200 = 21x The Netherlands for their €12M valuation.

Again, is that a lot?

Let’s go crazy.

Assume that Deliverect’s eventual market is Northern and Western Europe. The rest of Europe is out because of eating habits and purchasing power. The US is out because of expected killing competition from local players.

Then their market, based on inhabitants, is 17x The Netherlands.

And then the 67,797 subscriptions per month — or 21x The Netherlands — that Deliverect must invoice for its €12M valuation is a lot.

DIY

Phew. That’s a lot of assumptions. Do you have different ones?

Make a copy of the spreadsheet used for this post (File > Make a Copy…), put in your assumptions and draw your own conclusions.

Thanks to Hans Westerhof and Chretien Herben.

Originally published at venturevalue.com on April 12, 2019.