Deal in Focus: GFC, Project A team up for Pets Deli round

Just six months after Berlin-based online pet food retailer Pets Deli received its first funding, Rocket Internet's Global Founders Capital fund joined existing backers Project A Ventures and Index Ventures for the company's eight-digit series-A funding round.

The investors' mutual history is noteworthy. Project A's founders previously worked for Rocket Internet and left the company-builder to start their own venture capital firm. Pets Deli is the first joint investment since the VC was founded four years ago. Despite rumours about bad blood between the VCs, Project A co-founder and managing director Uwe Horstmann, who was among those who left Rocket Internet, sees the possibility of further collaboration: "From our perspective, the relationship is not strained and we look forward to working together in the future."

Loyalty driver
Horstmann explains how the VC went about the investment: "The first contact was half a year ago and we teamed up with Index Ventures from the start. We focus more on the operational side of building the business, while Index has a more classical approach, supporting the company on board level with strategic advice."

Horstmann says since the investors came on board, the company has improved its IT-infrastructure, marketing efforts and product development. Project A also helped Pets Deli to find new production and storage facilities, thereby increasing production capacity.

In the coming months, Pets Deli plans to increase its offline sales. The company currently operates two physical outlets in Berlin, but is going to roll out a shop-in-shop concept, which will see its products being sold within other stores. Pop-up shops are also planned.

The people who buy Pets Deli's products usually have a very strong connection with their animals and are happy to spend money on them. They also know how mass-produced pet food is being fabricated, which is not pretty" – Uwe Horstmann, Project A

Discussing Pets Deli's target audience, Horstmann says Project A saw great loyalty potential among the customer base: "The people who buy Pets Deli's products usually have a very strong connection with their animals and are happy to spend money on them. They also know how mass-produced pet food is being fabricated, which is not pretty. Those people question their own consumer habits and end up thinking about their pet's food as well."

The pet food market certainly has good potential. According to the latest data by ZZF, the German Pet Trade & Industry Association, animal owners in Germany spent a total of €4.4bn on animal products in 2014, of which €3bn was spent on food. The bulk of that was for dogs and cats, Pets Deli's target group. The costs for their food amounted to €2.8bn. The association states that in 2014 Germans owned 11.8 million cats and 6.8 million dogs.

Health-conscious pet owners
What distinguishes Pets Deli from other animal suppliers is its products, which are made mostly autonomously and are claimed to be free of animal by-products or slaughter waste, as well as artificial additives and preservatives.

The business states it only processes muscle cuts and that it sought advice from vets and other animal experts at the product-development stage. The shop sells fresh meat and dry food.

Pets Deli is currently operating in Germany, Austria and the Netherlands. The company claims its turnover has increased sixfold since receiving venture backing.

Advisers
Company – CMS (legal).

Further reading

• Expansion

Global Founders Capital and Index invest in Pets Deli

• 29 Feb 2016

• Exits

Deal in Focus: EQT’s EEW exit is largest ever Sino-German trade sale

• 11 Feb 2016

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