Cortilia raised €34m Series C in COVID times
This is why we reinvested
by Ivan Farneti and Giancarlo Addario at Five Seasons Ventures
Imagine to be an athlete training for the next Olympic Games planned to happen in 3 years, and imagine that, unexpectedly and unreasonably, you receive the short notice call that the Games are actually taking place TOMORROW.
This is more or less what happened to all companies during the COVID pandemic. Nobody could have prepared for this challenge: some gave up, some decided to try for a while, a few decided to focus, define a specific short-term strategy, invest, take risks and go all-in.
Cortilia went all in and it paid off.
Within weeks after the beginning of the first lock down in Italy, demand for home delivery of food and groceries surged to multiple times the maximum capacity available. As mobility restrictions tightened further up, an online grocery service like Cortilia evolved from convenience to necessity.
During this hectic period, we witnessed the professionalism and commitment of the whole team at Cortilia and the resilience of its short-supply-chain model: not a day of work was lost, no food was out of stock, no delivery missed and no cases of Covid.
On the contrary, management focused, split tasks, reorganized shifts, kept staff working from home leveraging the comms infrastructure as a true tech company, using its own software to remotely orchestrate the supply chain, from their farmers to the delivery truck drivers. The team executed with precision at 95% of capacity for almost 10 months, delivering hundreds of thousands of orders in 2020, including thousands to hospital care people and to older-age customers as a priority, donating free meals where it mattered.
At Five Seasons Ventures we invested in Cortilia’s Series B round only few months earlier, however, by the summer of 2020 we understood that it was time to raise additional capital and scale the busines to the next level.
We had been in similar situations before and our playbook follows 3 steps:
Step #1 — Design the equity story: define what makes the new opportunity attractive and credible, and how much capital it needs to become reality. Besides the intellectual work, management appreciates our help putting together presentations, discuss financial models, check legal and financial documents, and do this fast while they also have the day-to-day business to run.
Step #2 — Align internal interests among the various parties: (Any) clarity helps making better decisions, especially when speed is required. The internal parties should agree the 3 key acceptable deal parameters: amounts, valuation, dilution (i.e. options too), and agree where the financial support is coming from and — possibly — if such support remains there, should the main plan not work (think about internal round, bridge loan, etc.)
Step #3 — Start the fundraising process quickly: For a large equity round, we normally brief our closer network of specialized investment bankers to understand the market dynamic and have (one of) them ready to take action. However, the most valuable calls go to our own investor contacts as being able to see a deal before it gets on the market often turns into an opportunity to take the deal off the table.
In the case of the €34m Series C round of Cortilia, we had known the team of Renzo Rosso for a few years as active investors in innovation, after successfully building the Diesel Jeans fashion empire on branding, technology and logistics. They had been following Cortilia for a while too, and the speed of their decision to invest was a function of existing knowledge from previous investments in food production and distribution. Their experience will add precious insights to Cortilia’s team.
We decided to reinvest in Cortilia as, clearly, we believe the upside potential now looks greater than when we first invested. Cortilia is coming out of the bend at high speed and a round of this size will help widening the gap with anyone running behind. The finishing line is still far away, no doubt, but we believe Cortilia can become a true national champion and a rare IPO candidate on the Italian stock market, where there is an incredible scarcity of digital and ecommerce businesses. We share this vision and ambition with management, and we certainly share it with new and existing shareholders. Maybe one could wonder what the customers of Cortilia will think think or do?: would they become, one day, not just customers but possibly shareholders? That would be a gold medal victory.
