Announcing Butternut Box’s Series C of over £20m
…and reflections on scaling from Series A to C
We are proud to announce that Butternut Box has raised a Series C round of over £20m led by L Catterton, who bring with them a wealth of global experience with brands and dog food in particular, with participation from both White Star Capital and Five Seasons.
This round comes less than 12 months after we co-led the Series B alongside Five Seasons, and, having worked closely with the team, we truly believe this is a testament to the constant focus of David and Kevin on two crucial parts of the business: Customers and Culture. Here, we wanted to take a step back to reflect on how the company has done so far and share some key insights from their journey in scaling from Series A to Series C.
Butternut Box has now prepared over 20m meals, growing their customer base c.350% year on year. What’s exciting is that we can clearly see the rise of conscious consumption and humanisation of pets in action, over 70% of Butternut Box dogs were previously being fed dry food, and this is not a London-only market as many initially thought — 80% of customers are now outside of Greater London!
Where Butternut Box has really excelled is in using its distribution channel — Direct to Consumer — to its advantage. They’ve built an incredibly active community which they have been able to leverage in order to test recipes, new products, and iterate existing products. This community drives a significant amount of acquisitions through refer a friend and leads to NPS scores above that of Apple and cohorts that are closer to Netflix than to their human peer models.
Customer retention and repeats are vital in allowing businesses to become less dependent on marketing as they grow. Community and adopting strong BI tools early on to understand customers have been two vital tools to optimise for this.
Scaling Culture and Team
Many management teams start showing cracks when a company doubles in size two years in a row. We’ve seen it with founders not being able to “let go” of decision making, we’ve seen it with a dilution in the sense of ownership as a company increases in size, and we’ve seen it with some team members not being able to scale up with the company. Butternut Box have avoided all three of these, and have seen a continuously increasing eNPS score (Employee Net Promoter Score), now over 85, and continue to have the highest employee retention rates in our portfolio.
How Have They Done This?
1. From early on, David and Kevin hired functional heads from relevant companies such as Ocado, Gousto, HelloFresh, Hostmaker and more. This meant that they were able to hit the ground running and augmented Butternut Box’s ability to make the right decisions. There was no trial and error from square zero, these people had done it before, and brought that knowledge to Butternut. This has meant that there is a great degree of trust between management, with everyone trusting in the execution capabilities of their fellow heads even during the toughest of times, with record weeks of growth even during the fundraising period.
2. We find that many investors and entrepreneurs pay lip service to employee equity incentives. Often, this is given on the way in, rarely topped up, and not brought up with employees as a source of pride and value. Butternut Box has taken an entirely different approach. Equity is granted to the entire team and topped up yearly with clarity on the value of the equity at any point in time. With every round, David and Kevin ask to expand the ESOP to continue grating options to the entire team. When a customer is speaking to a customer love team member at Butternut Box, they are speaking to someone that is an owner of Butternut Box.
3. Individuals’ ability to scale with the company can often be a challenge, and David and Kevin have proactively sought out individuals to act as mentors and advisers to themselves and to the wider team wherever possible. This ranges from Richard Flint (former CEO of SkyBet who joined the Board), to Mike Wystrach (CEO of Freshly), Roger Hassan (now COO of Tier and formerly CEO of Echo and COO International at HelloFresh), Bryan Mahoney (CTO of Arfa and former CTO of Glossier) and many more. The common trait between all of them? They’ve have all done it before.
We’re looking forward to what the next 12 months holds for Butternut Box! After the successful launch of treats and scaling up their production facility, this will be a year of further product expansion, as well as internationalisation, as David and Kevin continue on their mission to build Europe’s number 1 dog wellness company!