Deliverect experienced a meteoric rise to unicorn status thanks to the confluence of two major trends. Based in Brussels, the startup was founded in 2018 with the mission to help restaurants digitize and expand their footprint across all possible channels. Just as the pandemic was accelerating the digital transformation of this sector, a wave of capital swept across Europe. The FoodTech company raised $237 million in venture capital, including a $150 million round in January 2022 that included such major international players as DST Global.
The company officially has four co-founders, including CIO Jelte Vrijhoef, CTO Jan Hollez, and President Jérôme Laredo. However, the concept originally began with the fourth co-founder and current CEO Zhong Xu based on an experience he had working for his father. Today, the company has 300 employees and is processing 300 million orders.
Xu joined us recently on the SeriesE podcast for a wide-ranging conversation about his personal journey, the company’s history, the impact of the pandemic, and the future of FoodTech.
Here are a few key highlights from our conversation:
- On what Deliverect does:
“We’re really building that backbone of digital food. We really are helping restaurants around the world, small and big, to connect and sell on all possible online channels. We started very much in helping restaurants to connect to channels like Uber Eats and Deliveroo and Just Eat. But today, we’re really providing one operating system for these restaurants to sell omni-channel. And what really makes us unique is we don’t only help them to sell online. We help them with their menus and workflows. We can do that because we connect to pretty much every point of sale. Today we power almost 40,000 restaurants in 14 markets.”
- On family ties:
“I’ve been almost 20 years in the hospitality industry. I grew up in this space. You know, my father had a point-of-sale company for Chinese restaurants. And as an immigrant kid, you can imagine he was asking me to do all the work and putting me at work at age 16,17. So I grew up there because at that time I even created over 1000 very ugly websites for Chinese restaurants. I was a very rich teenager because I was charging €250 euros per website, multiplied by 1000s. However, I didn’t want to take over his business, because it was old, clunky, you know, point of sale legacy. I wanted to study software engineering.”
- On the origins of Deliverect:
“The idea of Deliverect actually started in 2017-18, where I had all these restaurants around the world actually complaining about one thing. They were saying, ‘Hey, we see there’s something called delivery popping up, you know and almost 10 20% of my revenue is going to these Uber Eats, Deliveroo, and so on.’ Back then, a lot of restaurants were saying, ‘This is never going to happen. Who is going to order food online? Are you crazy?’ However, some of these early adopters saw the trends…So [they said] we need a partner that can help us to build a platform where we can sell and be future-proof. Because today, maybe it’s Uber Eats, Deliveroo, and Just Eat, and tomorrow it’s Instagram, Facebook, Google, Alexa, wherever that a customer can order.”
- On transforming the restaurant industry and the pandemic:
“I think most industries spend a very big chunk of their money on software and tools. While in restaurants, it’s still only less than 5% of their total expenditure. So, it’s very underdeveloped. I think really the pandemic accelerated something that should have happened in a timeframe of five to 10 years to only two years, where every restaurant around the world was forced to rely on digital to survive. And so that’s also forced us to accelerate. I think our timing was impeccable.”
- On scaling during the pandemic:
“We literally scaled from 40 people or 50 people to now 500 people. We added last year 250 people. So, for us, it’s a very big challenge to do that. And that was honestly fun and not fun. You know, it’s painful to grow that quickly. But you if you need to do it, you need to do it.”
- On navigating the economic and funding downturn:
“I love it because finally, you can make a distinction between an okay company, a good company, and a great company. In the last year or two, there was no difference. If anyone has a grandiose idea, you could raise capital. You don’t need to look at metrics. You don’t really need to look at the results. And that created a situation where it was very hard to hire, because how do you differentiate when everyone’s raising capital and everyone is trying to hire a lot of people? Now it’s better, where you have a more stable environment, where you can build a sustainable business. At the end of the day, any business you need to build on the long run and be sustainable and make a profit. So that’s great.”
- On why he relocated to New York City:
“We serve restaurants in 40 markets. But one of the funny things is, the US is one of our biggest markets. And if you ask most customers in 2021, or even 2022, they will say this company is not present in the US, although we have all these customers. And I think, you know, a lesson learned, especially for European founders is you want to make an impact in the US, you as a CEO, or at least one of the co-founders need to move. It’s not nice to have, you need to move. Because once a C-level is in the US, then you guys are American as well. But because everyone is an immigrant here anyways, they tend to believe that you are a US company. And that makes a big difference in credibility and just getting the deal done. Because why would someone buy important software from a different continent?”
- On being an immigrant founder:
“I really believe you can build a great company anywhere. You do need to travel because you need to make these connections. But you know, you’re not limited in a country. It’s really your mindset…You have all these distribution channels that are global and that you have access to…So I think sometimes we’re finding excuses why they cannot do it. I really believe we can do it everywhere. That being said, I think at scale, especially if you want to raise capital, a network is important. So it does help if you have that existing network. As you know, it’s not that easy to build credibility and raise a lot of capital if people don’t trust you.”
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