When we invest pre-product and pre-revenue, we focus on the founding team and the market opportunity.
If anything characterises the last decade in consumer trends, it’s convenience. Uber arrives in 3 minutes, Deliveroo in 45 minutes, Koala delivers in 4 hours.
But when you consider the largest necessary household purchase you make every week, groceries, the experience is anything but convenient. You’re forced to choose between three unsatisfactory options:
- Driving to a shopping centre, finding parking, and shuffling through the aisles with hundreds of others.
- Picking individual items each day from the poor selection at your local corner store and paying a 30% premium.
- Organising delivery online from Coles or Woolworths days in advance and knowing you’ll get the worst fruit & veg.
Clearly, there’s an opportunity for a new company to improve the grocery shopping experience for a convenience-led world, delivering groceries in minutes at supermarket prices.
Grocery is a $122bn market in Australia, dominated by slow-moving incumbents with low NPS.
The population is urbanised, wealthy, and willing to pay for on-demand food delivery (Melbourne & Sydney are in the top 5 cities globally for Deliveroo).
While grocery is traditionally a low margin category, we believe that there is the capacity for improved unit economics in multiple areas:
- Personalisation: With an app that uses data effectively, you can personalise the shopping experience for each consumer, increasing average basket size and improving frequency and retention.
- Range localisation: A smaller retail footprint in lower-cost areas, combined with a solid data infrastructure allowing a granular understanding of which products sell in which suburbs, enables lower leases, wastage and inventory costs.
- Vertical Integration: Having a direct to consumer relationship leads to constant customer feedback. With that feedback, you can create new products directly with producers and expand product margin.
- Range Expansion: Over time, you build up a dense network of micro fulfilment centres throughout cities, allowing you to expand into higher-margin products and potentially partner with other brands that want to deliver a delightful consumer experience.
To win at this model locally, the founder would need to build a loved brand, a delightful customer experience, and have a ruthless focus on unit economics to make the margins work.
We’ve known Dany for years through Koala, the business he co-founded with Mitch Taylor in 2015 and stepped back from last year, so when he sent this message in May, we immediately got excited:
Dany has a unique set of skills that makes him ideally suited to win this category in Australia.
- Direct to Consumer Experience: Previous experience launching and scaling a direct-to-consumer brand loved by customers, and a focus on ops and unit economics sharpened through hard-won experience building a business with limited funding.
- Talent Magnet: Dany is a born storyteller and can effectively articulate the scale of the opportunity in a way that would make anyone want to work with him. Pre-launch, he had already brought on a world-class team from companies like Dollar Shave Club and SafetyCulture.
- Speed & Intensity: MILKRUN entered the market and scaled quickly. The local network effects give them an advantage over future competitors. Dany lives and breathes MILKRUN with an intensity that’s both astounding and infectious. A day in the life of MILKRUN is a week for any other startup.
Working with this team is like living on fast forward, the extent of what MILKRUN has achieved in just a few months gives us a glimpse of the extraordinary things they’ll make possible in the next five years.
They’re launching new suburbs all the time and have a loyal customer base leaving the type of feedback most companies can only dream of:
Shortly after we led MILKRUN’s seed round alongside Skip Capital and Grok Ventures, they quickly emerged to be one of the fastest company we’ve ever backed. We’re excited to be part of their Series A round and continue the journey with this fast-paced and ambitious team.
Sound like a team you want to be part of? They’re hiring 🥛