The Dejbox success story, an oddity in the food delivery space

Food delivery, a tough space 

Food delivery startups... In our views, mostly capital-intensive, money-losing, crowded & poorly differentiated businesses, with limited tech & often a strong reliance on a more & more controversial gig economy. Definitely one of the areas we at Partech weren't willing to invest in, when I joined in early 2015 to cover our seed investments in France. 

So the fact that my first deal as a lead investor, only 9 months after becoming a seed VC, was a food delivery company called Dejbox (whose mission is to democratize the access to great but affordable daily food to everyone), means that we had a good reason to change our mind here!

And indeed (keep reading this post to understand why), Dejbox is an oddity in the food delivery space: very profitable, scalable & capital efficient, and strongly differentiated… but you’ve probably never heard about them before! Serving close to 20K lunches a day, having raised only 2,5M€ in equity from VCs (yes, 2,5M€, not 25M€ ;) ) is the best proof of how successful they have been...

4 years after our initial investment (when the company only had a few employees), we're both extremely excited & proud to announce the acquisition of Dejbox by Carrefour, a leading food retailer worldwide (notably part of the "CAC 40" French stock market index), to help Dejbox grow even faster & more efficiently than ever before! 

Seeding Dejbox 

France is a very centralized country. The startup scene is no exception, and unfortunately, a large part of the activity is centered in the Paris area. However, you'd be a fool to think that nothing happens outside of it. Lille, Montpellier, Nantes, Lyon & other cities are getting hot too!

In Lille precisely, you can find a great startup incubator/accelerator/hub called Euratechnologies. This is where I first met Dejbox in May 2015 (and were we also met with other Partech portfolio companies like Karnott, Giroptic or WayKonect).

I immediately clicked with the founders Adrien & Vincent. To the point that in the following months, we stayed in touch and had a few informal advisory calls where they were updating me on their business, and we were discussing the key questions they were facing as first-time early-stage founders.

A few months later, Partech was leading, alone, Dejbox 500K€ early seed round, when they were serving < 100 lunches a day, in a very artisanal way.

– Vincent & Adrien in late 2015 during Partech due diligence ;) –

Many VCs had seen them (as they were among the 10 finalists of a national startup competition "French Digital Tour 2015", organized by France Digitale), but the deal was not competitive: we were alone to be willing to invest so early in this company. Indeed, in spite of a very intriguing pitch from Dejbox, food delivery was still not sexy & attractive for many VCs, and their positioning probably less appealing to VCs themselves as individuals. I was lucky to have been intrigued enough to dig into it and finally see the potentially hidden gem.

The magic of Dejbox unique positioning & model

What always struck me in Dejbox is how obvious & unique their model/positioning is once you have really understood it, but how few people actually got it in the first years (when the pitch was not clear & articulate enough, it was actually very easy to confuse them with a mainstream B2C model, which might also explain why so few VCs got interested).

Because in the end, this is the thesis underlying Dejbox:

1/ Most food delivery players are facing 2 big challenges that prevent them from being great businesses, namely delivery & marketing:

• One delivery person is typically able to serve a few orders per hour maximum, leading to a very high logistic cost per order, and thus making it necessary to have prices >> 10€, and still leading to often quite thin contributive margins for the food delivery companies. Plus, it also means that you need a lot of delivery people as you scale, becoming a limiting factor for both your business growth & the quality of your customer experience,
• Marketing costs are typically very high as many players are fighting for the same demographics (people near city centers with a decent purchasing power), who have however already many traditional local alternatives (restaurants, bakeries, fast food, etc) & thus mostly seek convenience, and who are also hard to target precisely (be it online or offline) as they are spread across city centers. This leads to a typically very long time for those players to fully recover their marketing investments (between high customer acquisition costs, capped order frequency & more limited loyalty of customers in a competitive environment),

--> the economic equation is thus quite challenging, especially before reaching maturity at scale, requiring to spend a lot of money to get there, as illustrated below:

– Economics of the main food delivery models (hint: Dejbox is none of those!) –

2/ There is an immense “blue ocean” out there (i.e. a market with virtually no competition yet), that nobody was taking care of before Dejbox: the daily lunches of (SMB) employees working in the suburbans areas around large cities.

• They indeed have little lunch choices, as their company typically doesn't have a corporate canteen (fixed costs doesn't make it possible to have one in SMBs, and even in bigger companies with one, employees are usually disappointed with their canteens & looking for alternatives), and there are limited places where to buy a lunch in their neighborhood (maybe one supermarket & one bakery, with potentially the need to take your car to get there). So, many employees will end up bringing their own meal, and just wish for being included one day in this "food delivery" movement (esp. the millennials), but at a price that would be reasonable enough to make it a realistic daily option for them (12€ is far too much, in case you have a doubt…)
• Most entrepreneurs will typically solve their own problems, and they usually haven't experienced the daily work life of a suburban SMB employee (but rather the one of white collars in city centers, exactly as VCs themselves by the way). 

3/ It is actually possible to serve those customers much more efficiently than those in city centers, in spite of an apparent geographical dispersion & typically more limited purchasing power of those demographics.

Indeed:

• The roads in suburban areas are much less congested than city centers at lunch time, and companies are often organized in "hubs", so that a "postman tour" (i.e. a fixed itinerary going through the same companies everyday) can work extremely well if managed properly, allowing one delivery person to own a local area, create real & lasting relationships with his customers, and... deliver >> 100 lunches in under 2 hours with just one van! (which is absolutely mind-blowing, and probably 20x the industry standard),
• It is also possible to market your offer very efficiently, as you know exactly where your potential customers are (you have indeed full control on your itineraries & define yourself the companies you want to serve), so you don't need to run expensive & untargeted marketing campaigns,

--> doing so, you have a model to address a large & blue ocean, while solving the 2 major pain points of most food delivery players in terms of unit economics & scalability: (i) logistics and (ii) marketing!

– The “behind the scene” of a Dejbox itinerary, but you won’t see more than that ;) –

That's precisely Dejbox vision: becoming the first "virtual canteen" for the daily lunches of employees working in SMBs in suburban areas, solving a real pain for them! In case you're wondering how big this market is, more than 3.5 millions people in France alone are concerned... 

The subtlety, however, is to not run a B2B model at first, but to be what we like to call "B2employee": employees of the companies in an existing Dejbox itinerary can order themselves through the Dejbox app (as you would do on mainstream food delivery apps like Deliveroo or UberEats), without a minimum order quantity within their company nor the need to order through their company, and be delivered for free at lunch time (as long as they order 2+ hours in advance). 

The magic for the Dejbox customers is that they get, for the typical price of a lunch voucher (< 9€), a complete (big dish, dessert, drink) & really delicious lunch (just have a look at online ratings), that they can choose from dozens of different options every working day, and delivered for free! To customers, that's the magic of it: it looks almost impossible to them to get, delivered at their office, such an incredible lunch at such a competitive price... (together with a great customer service & care obviously).

– It is as good as it seems! What about this dish + a dessert + a drink for 8,9€? Beyond an incredible business model & team, this is the real magic of Dejbox: great food to delight customers at low price! –

And the magic of this model is that Dejbox still makes a very healthy margin in spite of this already apparently "impossible" offer, because their marketing & logistics costs are so optimized! Plus, they're asset-light in terms of food production, as they rely on a network of high-quality caterers & local restaurants. They have thus really cracked a unique "equation", creating a beautiful & virtuous business model "by the book" (many times, I’ve shared a few numbers about Dejbox to food delivery experts or VCs, who didn’t know yet about their model, and was met at first with a “suspicious scepticism” :) ). 

As Adrien & Vincent like to put it: "The euros paid by our customers go mostly into their lunch, not into our logistics or marketing costs".

The B2B model (where companies can notably subsidy the lunches of their employees) only comes as an optional step 2, creating a win-win-win situation for employees, companies, and Dejbox, but never being an impediment to serving customers in the first place. 

Impressive achievements & growth 

This is the theory. You can make an outstanding, highly compelling pitch & slide deck with all this (which we did, and it changed everything for the company in terms of its ability to think about their business, and build conviction quickly with partners, candidates, corporate clients, customers, investors…). But, then, there is the reality in practice. And believe me, this is another story to actually make it happen, with great user experience, healthy economics & scalability! And that's where it becomes much, much more challenging. Because the "system" you must create (software, logistic organization, processes, network of suppliers, data & KPI intelligence, recipes, operational excellence, roles & responsibilities, etc) for making this actually work efficiently & at scale is extremely subtle & complex: we like to compare it to a Swiss watch. There is nothing more I can say about it obviously, but this is really the secret sauce of the company, much more than their (still) unique vision & positioning!

In less than 5 years, the Dejbox model went from Adrien & Vincent being the only 2 delivery men in 1 city serving a few dozens of lunches a day, to a 300+ people company, serving close to 20K lunches a day in 6 city areas already (Lille, Paris, Lyon, Bordeaux, Nantes, Grenoble), and much more to come in the next years.

Those numbers are truly outstanding & unheard of, especially when you know that the company only raised 2,5M€ from VCs (with Partech seed fund leading both financing rounds, which is highly unusual for us).

But beyond those landmark numbers, there is another aspect of Dejbox business that is truly remarkable: their social responsibility. Their very noble mission of democratizing the access to good lunches to everyone is combined with the fact that all their 140+ delivery people are employees of the company: no gig economy. This is something we are all extremely proud of! Those delivery people are key enablers of the Dejbox model, with real ownership of their respective itineraries & customers.

Adrien & Vincent are remarkable entrepreneurs: their ability to spot this unique opportunity, to iterate on the positioning, to find a model that works, to execute & scale it with all the challenges of operations-intensive businesses, to create in the process varied innovations to cater to the specific needs of their model, is humbling & mind-blowing! In spite of their tremendous success & personal growth, they have always stayed very pragmatic, humble & cool-headed. Even after signing the deal with Carrefour, you could feel that they were no distracted & just focused on their goal: grow Dejbox and make their vision & ambition a reality! 

A great exit with happy shareholders, but above all just the beginning for Dejbox + Carrefour

In the first years, one of our key concerns had been competition. The model is so good, so much better in our views than most players, that we were naively expecting many well-funded players to rush into it in the past years. So, we stayed under the radar, and didn't even communicate, until earlier this year when we felt strong enough, on the backing from Partech. 

Incredibly, no competitor has come yet (probably because the positioning & the model are not appealing to most “mainstream” digital entrepreneurs, and most existing food delivery players could not quickly launch such a model deeply differing from their core one), allowing Dejbox to strengthen their model & position on the market, and become the clear leader in the space in a few years!

But Dejbox success didn't go unnoticed by everyone though: conversations started early with leading corporates from the food industry to see how we could work together… One of them was Carrefour, whom I proudly introduced them to, with a genuine & bullish suggestion to have a serious look at the company considering the increasing focus of Carrefour on food, and notably their "Act for food" commitment, very aligned with Dejbox vision & values. 

Within time, the relationship grew stronger, and so did the mutual interest & respect. Until the obvious became apparent: the vision & business synergies between Dejbox and Carrefour are just massive! 

The normal path in “Startup & VC land” would have been to raise a Series B of course. But money alone was not the main requirement to put Dejbox closer to every potential customer in France & beyond. 

However, as a VC, lead investor & board member, and #1 shareholder of the company, it was not easy to imagine selling "so early" in the incredible journey of Dejbox. Because, seriously, it is really just the beginning! 

Thankfully, we ended up finding a deal that nicely aligned the interests of Dejbox, Carrefour & Partech (with the valuable support from the Cambon & Villechenon teams), making it an outstanding exit for our seed fund (less than 5 years after its launch).

– The Dejbox board, just after signing some important documents for their future (which is the only acceptable justification for eating something else than our usual Dejbox we love :) ) –

I sincerely wish Dejbox an amazing journey for this new chapter of their success story: millions of employees are still waiting for Dejbox to come to their office and serve them tasty, generous & reasonably priced lunches everyday :-) And Dejbox couldn't have dreamed of a better partner than Carrefour to accelerate their growth!

Our biggest pride at Partech: having been a key enabler of Dejbox success 

It is also the opportunity for us at Partech to illustrate concretely something we've been quite vocal about: value-add. As VCs, obviously, we're are not running the companies ourselves, and we don't claim to be able to be transformative on every board we're at. But we make our best efforts to be impactful & supportive :)

Honestly, we are proud to have been the first & only VC to trust Adrien & Vincent at the very beginning, and, most importantly, to have been a super active board member & advisor to the company since then. Together with my peer VC & now friend Hervé Cuviliez, who joined the board with our first investment, and co-invested 2 years later with us for the new round, and with whom I’ve exchanged a lot in those past years. 

For Partech, beyond the financial success, Dejbox is also a great showcase of our “platform effect”: helping Dejbox find partners, suppliers, candidates... and acquirers, having the Partech Shaker as a Paris-based office when needed, getting access to the Partech community, talks, financial benchmark from our growth team, help from our legal team, etc.

At a personal level, I've spent on average ~6 hours per week with the company. This is highly unusual for a seed VC, and only possible because of the scale we have at Partech, allowing us to have an awesome “backoffice” supporting our investment team on finance, legal & other key VC duties, (so a big thank you to Karen, Christelle, Emmanuel & their teams, as well as to Romain who’s leading our seed funds, making it possible for people like me to spend a lot of time with our portfolio). The level of relationship, trust & intimacy we developed with Adrien & Vincent is exactly my purpose and the reason why I chose to become a seed VC 5 years ago. 

– Adrien, Vincent & I (from right to left), feeling like a team! –

In 4 years, as the company matured, evolved its model & grew tremendously, I probably covered every single possible “startup building & scaling” topic together with Adrien & Vincent (through workshops, calls, board meetings, email threads, Slack & co), on a weekly-to-daily basis. 

Topics like: business vision & strategy, strategic planning & roadmapping, company & execution steering, finance & cash, business KPIs definition & deepdive, market analysis & competitive watch, positioning, brand & messaging, business model iteration, business modeling, compelling company & sales pitch, operations design & mapping, growth machine, food offering, pricing, B2B offer, digital product & tech, team organization, roles & responsibilities, hiring & candidate interviews, internal communication & culture, business partnerships & negotiations, founder relationships & personal growth, fundraising strategy & execution, and lately, M&A!

– A workshop together, at the Partech Shaker in Paris – 

I also like to imagine that I might be among their best customers: despite Partech not being on their delivery routes, I was so often in Lille working with them, and bringing home a few "Dejbox" for my wife Delphine & I, that I've probably tasted hundreds of different recipes ;) I also pride myself on being able to eat up to 3 Dejbox during a single one-day workshop (and believe me, this is a feat ;) ). 

But more seriously, value-add of VCs is often overstated by VCs themselves, so the best option was just to ask to Adrien & Vincent what they think of our partnership during almost half a decade. Beyond being very good memories for all of us & some humble brag, stepping back on this will hopefully be interesting & useful to others!

This will however be the topic of another article in the next weeks (you can now find it here) :) Here are just a few quotes from Vincent & Adrien as a teaser:

"We simply wouldn’t be where we are today without the support from Boris & Partech, and it has been a real privilege to have them onboard!"

"When we first met Boris at Euratech, this was a huge slap & by far one of the most important moments in the Dejbox story. Our very first key “hire” at Dejbox has been our lead investor & board member."

"A huge, huge THANK YOU for this amazing journey together... We get out of it deeply transformed, grown up, and most importantly, fully ready to open a new, super exciting chapter of the Dejbox story with Carrefour!"

Thanks for reading, and sincerely all the best to Dejbox + Carrefour! 

PS: also thank you to my wife Delphine & my newly born baby Thomas for their patience, love & support as Dejbox has been taking a lot of my time those past years, and even more the past weeks...