UK-based food delivery startup Appetise is looking to raise $6.8 million through listing on the Australian Securities Exchange (ASX) in an effort it hopes will boost its profile and expand its market share.
Appetise is an online platform for food delivery connecting customers to restaurants through an online marketplace, much like Menulog’s offerings. Unlike UberEats and Deliveroo, it does not manage its own fleet of delivery drivers.
The startup operates nationwide in the UK and claims to have a customer base of close to 90,000 users and 400 restaurants. Chief executive Konstantine Karampatsos says the company is seeking to list on the ASX to raise its profile and take a bigger chunk of the $7.7 billion UK food delivery market.
From Deliveroo and Uber partnering with major supermarkets to Menulog’s $470 million acquisition by Just Eat, it’s clear the food delivery market is a lucrative sector, and Appetise’s initial public offering is just another in a string of aggressive growth moves from startups competing in the space.
Founded by a group of university students in 2008, Appetise was bought last year from US-based investor Bergen Asset Management, and it was Bergen’s experience working with startups operating in the ASX landscape that led Appetise to want to list Down Under.
Karampatsos points to Melbourne startup GetSwift as an example of a successful small IPO, and says Bergen was drawn to the ASX after the success of the “dozens of investments” the US investor had made in ASX-listed companies.
Appetise has successfully lodged its prospectus with the Australian Securities and Investment Commission (ASIC) and hopes to list in early November with an expected market capitalisation of $15.8 million.
Karampatsos says price also played a role in Appetise’s decision to list in a foreign market.
“Listing on the London stock market costs much more, it makes more sense to list here [in Australia]” Karampatsos says.
Rather than securing funding from investors back home, Karampatsos says the startup chose to list on the ASX not only to raise funds, but also its profile in the UK.
“Listing will actually help the business in the UK because we can get more restaurants on board, and secure successful partnerships with businesses,” he says.
“It will raise our profile and help us create more profitability.”
The startup processed $500,000 in order volumes and banked close to $50,000 in revenue the last financial year, with a loss of more than $1.1 million the financial year to 31 March 2017.
Karampatsos admits Appetise is still “a small company” but attributes the company’s low yearly revenue to its focus on setting up apps and a scaleable website, rather than customer acquisition and marketing.
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Despite this, Karampatsos is confident the market opportunity for Appetise “is huge”, and says it is time for the business to grow.
“The industry is very hot currently — it’s the right time, it’s growing a lot, and we believe this listing will help us and give us the funds to grow very very fast. This is the time to grow,” he says.
With time of the essence, Karampatsos says the funds raised in this IPO will fast-forward the startup’s growth and market reach.
“In five years from now the market will slow down so we need to get market share now,” he says.
The company will be offering 43% of available shares through the public offering, with existing shareholders to retain 57%. Thirty-four million shares will be offered at an issue price of $0.20 per share. The company is hoping to raise up to $6.8 million, with a minimum share subscription of $4.8 million from the sale of 24 million shares at $0.20 per share, according to its prospectus.
Despite listing in Australia, Karampatsos says Appetise’s operations will still be based out of the UK, and the startup has no immediate plans to launch its offerings locally, instead focusing its efforts on consolidating its presence back home.
If the startup raises the $6.8 million in funding it is seeking, Karampatsos says 40-45% of those funds will go towards marketing and customer acquisition, and the company is looking to expand its sales staff and develop its online platform.
“We want a great app and a great website — when you’re a marketplace you can never stop investing in technology,” he says.