Burda Principal Investments is leading the current financing round for Neotaste, the German restaurant app that digitally connects guests and gastronomy.
Julian von Eckartsberg has been Managing Director Europe at BurdaPrincipal Investments (BPI) since October 2021. In this position, he is responsible for transactions conducted by the capital-growth arm of Hubert Burda Media in Europe. One such deal in which he played a pivotal role was the investment in Arive in early 2022. The Munich-based express delivery service is the most recent addition to BPI's quick commerce portfolio. In our interview, Julian von Eckartsberg provides insights into this highly dynamic field.
What utterly impressed me was the quantity and quality of the companies that are coming in, the so-called “deal flow”. In my view we are seeing nearly 100 percent of the deal flow that is relevant to us, i.e. involving companies that are currently seeking money from investors and doing business in fields we are keen to invest in. The quality of the companies on the market is extremely high; on the other hand, as an investor we need to be highly selective. Every day we follow entities posting growth that multiplies by a factor of 10, 15 or 20 each year. We nonetheless say “No, thank you” to 95 percent of them. In addition to the quality of the companies, I was also impressed by how hungry the team is. Everyone is eager and excited about making a difference moving forward, and that’s a fun experience!
We regard quick commerce, or q-commerce, as a component of logistics; the emphasis is on exceptionally short delivery times. Our own focus here is trained on the last mile, the final leg to recipients which needs to be covered as quickly as possible. This is exactly what Arive offers. That makes it immensely attractive from Burda’s perspective because we have always wanted to be close to consumers – and it is this direct touchpoint that doesn’t exist for shipments from China to Germany, for example. Together with the German-British delivery service Zapp, the online service for authentic Asian cuisine HungryPanda and the Singapore-based logistics provider Ninja Van, our portfolio now features four companies from this sector.
Based on our hypothesis, we can draw parallels with Zalando’s advertising a decade ago. Back then everyone thought: “Why shoes online? You can buy those locally. And then I would have to send them back anyway...” The idea was basically dismissed as absurd – total nonsense. Yet user behaviour has changed for good, and this business model is here to stay. In regards to last-mile delivery, our thoughts are similar. Nowadays same-day delivery has become the norm and it’s all about being even faster. Users are so accustomed to everything arriving almost instantly that, at the end of the day, the ability of a brand to deliver at lightning speed will translate into a competitive edge. Even today, many traditional, top brands – particularly in the premium and luxury segments – are struggling to compete in the online segment, and it is exactly this sector on which Arive is focusing. We believe that Arive has the potential to build a global platform that enables these brands to offer customers an exclusive, high-end shopping experience online as well. Naturally digitalization plays a major role here; across the board, it has gained even more prominence during the pandemic. Particularly in the e-commerce segment, it is apparent that long-established companies are also aiming to reposition themselves. They are seeking ways to provide a new buying and brand experience by offering their customers delivery within 30 minutes or in any event, a very fast service.
One very important aspect is the warehouse. It obviously needs to be configured in a way that will allow the goods to be picked and punctually delivered within a narrow time slot following an order. The software is a central factor in this equation, as it must optimize the coordination between the merchandise range, the preparation of the products and last-mile delivery. This final step, i.e. the delivery itself, can be supported by digital route and capacity planning with the aim of maximizing the efficiency of the drivers.
As a general rule, no company should allow bad working conditions to prevail! That is a lose-lose situation for everyone involved: for customers, the company, and the segment as a whole. From an investor’s perspective as well, it is vital that such things do not happen. That is why the handling of this issue is absolutely relevant to us: what the conditions are and how to best mesh the model with the demand. As far as pay is concerned, there are various ideas and concepts that are not based exclusively on hourly wages, including profit-sharing for the driver. In fact, one of our q-commerce portfolio companies is currently introducing profit-sharing for their entire workforce. In addition, there are obviously also rules and regulations – governing the length of breaks, for instance – and these have to be followed to the letter. This issue plays a key role in our investment decisions, and the main points are defined as part of the investment process.