Why we invested in Cortilia? …it wasn’t just about the organic tomatoes…
by Ivan Farneti and Giancarlo Addario, at Five Seasons Ventures
We first met Marco Porcaro, Cortilia founder and CEO in the beautiful rooftop office of P101 Ventures in Milan in June 2018. We immediately thought we had in front of us a rather unusual entrepreneur for the Italian landscape, with clear vision and ambition, and without any moaning about the scarcity of early stage funding in Italy or the local bureaucracy, or anything else really. He just got on and did it. In fact he told us about a previous company — a route-optimization logistic business — he had successfully co-founded and exited. So, a serial entrepreneur, with relevant technology experience and a passion for natural, local food: check.
Few months later we had the chance to meet the rest of the Cortilia team: multiple nationalities, a wide set of competences in e-commerce, organic products, physical retail, logistics and technology, built working for firms such as Lastminute, Bio c’Bon, Accenture. We spent a good part of our investment assessment process understanding the people and the team dynamic as well as the business model and the operations, including the inevitable visit to the distribution chilled warehouse during the night shift at 3:00 am to learn about throughput, scalability, waste control and see where the digital customer journey meets the real food world. A battle-proven team in place: check.
We spent time understanding the market, we crunched the numbers for the Italian grocery market: despite food being the first expense item in the basket of Italian families, food e-commerce is yet to explode like it has in other European markets, but e-commerce demand has been growing locally at 30% per annum since 2015, and it is expected to continue at 14/15% for the next 5 years. Data shows that also Italian consumers demand increased convenience (online and mobile orders, home delivery, etc) but also require fresh, authentic/organic, local, healthier food options. With local competition currently limited to the online delivery service of local retailers and the very recent arrival of Amazon Fresh, we believe the overall market growth tide will keep rising: check.
Cortilia’s product is compelling and the growth and retention numbers validate the effort done by the team in understanding their customers ever evolving preferences (including seasonally), sourcing a unique fresh food offering and using technology to deliver a smooth, convenient experience, with minimal impact on the environment and on food waste. The product is indeed unique: none of the 2000 products found on Cortilia can be found at Carrefour or Esselunga or Coop, simply because the ~200 farmers and artisans would be deemed too small or difficult for the GDO to manage. Yet, Cortilia designed tools and processes to make these suppliers “retail ready”, make them scalable from stronger process and quality controls, to the promotion of their story and values behind each product. This know-how and technology are unique assets and can be further developed with adequate investment: check.
Finally, Cortilia showed the ability to build a community around its brand values of authenticity and sustainability thanks to honest storytelling on the website and social media channels, but also through physical events, opening up further potential upside in the possible development of own branded products, as well as the development of a multichannel strategy; the first step towards this direction is their experimental physical point of sale recently opened in Turin.
Food e-commerce has created immense value in other countries already. Italy is a laggard, yet is a very large and growing market where the title of national champion is still to be awarded. If this will ever lead to an IPO down the line, or trigger the interest of a large national/international retailer, we will find out. The right ingredients (fresh and organic, of course…) are coming together.
