Slice raises $43MM to fortify local pizzerias
I had a thesis 5 years ago that there should be a vertical marketplace for pizza. …And if you believe that, I have a bridge in Brooklyn that I would like to sell you.
I’m often asked to name some of my core investment theses. But while I have certain POVs and inclinations, I don’t want my investment opportunities to be limited by them. When you have tightly defined investment sectors, you are more likely to chase the same deals everyone else wants, and sometimes, the best opportunities are the ones you and others didn’t see coming. Slice, which announced today it raised a $43MM Series C led by KKR, is a prime example of this.
Back in 2015, we met Founder and CEO Ilir Sela and invested in the Seed round. Ilir’s father and uncle owned a pizza shop, and after college, Ilir built websites for his father and friend’s pizza shops in addition to getting online ordering up and running. He put the shops on a platform, calling it MyPizza. Without raising any money, he signed over 2K shops and was generating $40 million of GMV. After hearing his initial triumphs, we were left scratching our heads — why does a pizza-focused ordering business not only exist but apparently seem to be thriving?
Pizza is a $46+BN industry in the U.S., and it’s growing. And with 50+K local pizzerias in the country, independent shops are leading the way, despite not having the tools and tech of larger chains. Since 2008, Domino’s stock has increased 100x! Domino’s has outperformed Google, Amazon, and Facebook. The reason is not that the pizza magically improved — its investment in digital ordering has greatly paid off. The big unlock was that Average Order Value (“AOV”) went from $18 to $30 when you had a customer order online versus the telephone. When a customer calls into a franchisee, it is usually during the busiest hours and they are trying to get you off the phone as fast as possible so they can get back to making pizzas. When you order online, you’re easily able to upsell the customer with toppings, wings, and breadsticks, not to mention desserts and the two-liter of Coke! Not only are you getting almost 70% more revenue per order, but it’s all high margin items going into the same delivery. So Domino’s saw average store sales go from $600K to $1.1MM per year and even more importantly, these stores became much more profitable. Domino’s now does about 70% of its revenue from digital sales, while independent shops make less than 10% of their revenue from online/mobile ordering. This is a huge disadvantage as independents don’t have the same technology and know-how that Domino’s provides for its franchisees. And while aggregators like Grubhub could power these restaurants, you don’t have to look far to see how they’ve failed to serve these businesses.
With Slice, Ilir is empowering local businesses by managing their digital transformation to drive revenue growth and operational efficiency to level the playing field against larger chains. Online ordering and contactless delivery are more crucial than ever, and the circumstances we face now have been a catalyst for accelerating the digital transformation SMBs have been on the brink of. By helping affordably and safely feed families while sheltering in place while supporting local business, Slice has been able to do hundreds of millions of GMV, and performance still is steadily growing. Pizza sauce runs through Ilir’s veins, and he deeply understands his shop owner customers. Grubhub and other aggregators don’t have the SMBs best interests in mind, and present restaurants with another threat to their bottom line. Slice shows it’s possible to have a win-win relationship.
Their Series C fundraise fully began and wrapped during this pandemic. While there’s no shortage of predictions of how the venture community will handle the current uncertainty in the world, this shows that investments that can not only thrive in a pandemic but are likely do well in a recession economy will be able to find funding. Ilir bootstrapped his business originally and had never been exposed to the venture tech ecosystem prior to his Seed round. We are excited to continue to support Ilir and his team as they further build out products and services for the 50+K independent pizza shop owners battling it out with “Big Pizza.” Throughout the past five years, we have enjoyed watching him evolve and learn how to be a CEO by recruiting great people, setting vision/strategy, and raising capital. He has been able to build a business that both SMBs and consumers love, and truly champions the local pizzerias that have been underserved. Even in tough circumstances, Ilir finds ways to show support for the community. With PizzaVsPandemic, Slice has helped raise over $400K to not only support SMBs, but the frontline health workers who are fighting to save lives.
If you revisited 2015, it’s unlikely you would be able to find a single investor who said they were looking for a vertically focused online food ordering app. Grubhub seemed like the dominant player and a marketplace with scale usually creates a winner takes all dynamic, becoming impossible to dethrone. But with his deep pizza roots, Ilir knew two things that weren’t obvious to anyone else — one, pizza shop owners hate aggregators and two, consumers love pizza and will deviate from Grubhub to order from their favorite shop. Creating a relationship with pizza shop owners that is a true win-win relationship means you win supply, and you win supply, you win customers.
If you talk to investors, many have overlapping sector theses. When Zoom goes public, everyone thinks more about remote work. Or Plaid gets acquired, and everyone thinks about API as a service. Truly, some of the best opportunities lie in areas that no one was looking for. And when it comes to Slice, we can’t wait to see what’s next.
— Ben Sun, Primary General Partner and Co-Founder
For more about the fundraise, check out TechCrunch and VentureBeat.
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