Marley Spoon, the cook-at-home meal kit service, announces IPO

Marley Spoon, the meal kit subscription service that competes with the likes of Blue Apron and HelloFresh, has filed for an IPO in Australia. The Berlin-headquartered company is aiming to raise 70 million Australian Dollars (approximately $53m), and has chosen to list on the Australian Securities Exchange (ASX) in part because Australia is one of its strongest markets. It also operates in the U.S. and in four European countries, including Germany.

The IPO, which should complete in early July, will give Marley Spoon an indicative market capitalisation of ~200 million AUD (~$152m) on listing, priced at $1.42 per CDI. The majority of capital to be raised has already been placed with various public market institutional investors in Australia and a number of other eligible jurisdictions, while a minority will be made available to Australian resident investors via an allocation from their broker in a couple of week’s time, as per regulatory rules.

As with a number of other competing recipe kit services, the Marley Spoon proposition sees it deliver pre-portioned fresh ingredients for each recipe offered, so as to make it easier, more inspiring, and more cost-effective to cook at home. However, co-founder and CEO Fabian Siegel — who was previously co-CEO of online take-out marketplace Delivery Hero — has long argued that the weekly grocery shop, and to some extent restuarants, is the company’s direct competition.

To help with this, in the U.S. Marley Spoon has a partnership with Martha Stewart under the Martha & Marley Spoon brand. More recently, the company launched a cheaper, more mass-market offering called Dinnerly in a bid to make meal-kits less price sensitive and widen the product category’s appeal.

Siegel says the primary channel of customer acquisition is via customer referrals — for which no incentives are currently offered. In terms of paid marketing, Facebook trumps Google, since nobody really searches for recipe kits online and awareness that the product category exists at all is and remains the main challenge.

To that end, Marley Spoon claims 110,000 active customers across Australia, the U.S., Austria, Belgium, Germany, and the Netherlands (about a tenth the size of HelloFresh in the U.S.), and has forecast revenue of 93 million Euros this year.

Regards the decision to list on ASX, as of March this year, Australia represented 37 per cent of its revenue, which is slightly ahead of the U.S. and Europe. Siegel also tells me Marley Spoon is already break-even in Australia and is expected to be profitable in the country in the second half of the 2018 financial year, a pattern the company is aiming to replicate in other markets.

Asked why Marley Spoon has shunned further VC or private equity funding, Siegel, who was previously a Partner at Rocket Internet’s venture arm GFC, says he wants to be in it for the long term, and that an IPO — which sees 34 per cent of the company listed — means that the management team retains control. “You shouldn’t just blindly do what other people do, you have to understand what venture capital means for you,” he says, noting that VC was crucial to start the business and get it off the ground, but now he has decided it is “not the right thing for us”.

Specifically, since the channel switch from offline to online hasn’t yet really happened — which Siegel says it will eventually — he believes an IPO buys Marley Spoon enough time to grow the company at the same pace as the market for online grocery develops, rather than spending excessively on customer acquisition and other short term growth strategies.

“It’s a unique approach… We are still at day one now and we still have to prove to ourselves and the rest of the world that this in the end will have been the better strategy,” he says, candidly. But if it is, there’s a lot more of the $6.1 trillion global grocery market to eat into.