Our 9th Investment: Procsea, the Revolution of the B2B Fish Market

H1 2018 has been pretty busy at Samaipata! After launching operations in London and Paris, celebrating our first exit with FoodChéri, and witnessing the closing of 3 Series B rounds of our portfolio (the first two, Spotahome’s € 40M Series B led by Kleiner Perkins and OnTruck’s € 25M Series B led by Cathay Capital; the third one coming soon) we’re thrilled to share with you our 9th investment: Procsea. Yes, WE LOVE FOOD!!!, but we never thought that when digging into the incredibly special fish market we would discover such a potential for digitalisation.

Procsea is a B2B SaaS-enabled marketplace for fresh fish and seafood. We’re happy to have led their € 2.5M seed round followed by global marketplace specialists as FJ Labs and Piton Capital. Please find below why we think Procsea is ready to rock the scene!

A warrior that has survived all battles followed by an amazing army behind.

Understanding Procsea is intimately connected to the story of the CEO of the business, Renaud. Renaud is a survivor, a hyper resilient battle-hardened individual with absolute and genuine passion for his company and in-depth know-how of Procsea’s market.

Jointly with his co-founder, his experience goes from founding his own Franco-British seafood import/export business (practically living in the Channel, where he drove for months to trade products himself), to holding several business development managerial positions building distribution networks in France and Switzerland, mostly for seafood trade in the HORECA (Hotel, Restaurant, Café) channel. Renaud has built a business from scratch that today has c. 30 employees, including senior executive profiles to manage logistics, supply sourcing and business development.

Business consumerization is a huge global trend.

B2B models are adopting the dynamics of the B2C (‘consumerization’) as a sort of post-evangelisation of businesses once consumers have digitized specific daily life activities like buying food.

Restaurants, one of Procsea’s core demand-side users are a great example of this trend. After being part as supply-side users of the massive disruption occurred within B2C food tech marketplaces (e.g. OpenTable, Just Eat, Deliveroo, etc.), where the end-user (the millennial) forced them to digitize and to join consumer-facing apps, we now witness the same phenomenon where restaurants are forcing their suppliers (in the case of Procsea, fish merchants and farms) to integrate technologically. In a way, digitalization starts at the end of the chain, and climbs up, with the demand-side units of every link pushing supply-side units towards digitalization.

The fresh fish market presents many of the ideal characteristics to build a successful digital marketplace.

We love to come across models like Procsea that gather all the ingredients to cook the ideal digital marketplace. Here’s a quick summary:

1. A huge market: only fresh fish accounts for a global market of c. $ 250 Bn.
2. With a highly relevant discovery phase: Marketplaces are essentially discovery platforms. Often we come across pure transactional payment gateways that call themselves marketplaces too. While it is true that marketplaces require a transactional payment layer, these platforms are built to aggregate supply and demand, and to allow them to match (AKA, liquidity). Payment platforms without discovery layers are payment flows but not marketplaces. The relevance of the discovery phase in Procsea is based on:

• Lack of quality transparence: the demand side of the fresh fish market (wholesalers, fishmongers and the HORECA channel) has limited visibility on the quality characteristics of fishmeal coming from fishermen and fish markets. Procsea offers full traceability and transparency of fishing grounds, techniques and quality, that affects prices too of course.
• Heterogeneity and fragmentation in both demand and supply (volatility in price and availability, short shelf-life/perishable product, diversity): apart from being opaque, fresh fish prices are highly volatile due to unpredictable fish supply. Fishing is affected by regulations, weather (high/low temperatures kill species), fishing seasons (fishermen breaks), state of the fishing grounds (fishing limits to allow for species reproduction) and scarcity of specific species linked to the requests of the restoration industry. Procsea provides live prices and aggregates the supply to guarantee availability.
• Polygamous relationship: the demand-side (restaurants, hotels, wholesalers, fishmongers, etc.) marries different providers. They source fish from many different merchants every day and in every order.

3. Highly fragmented: high atomisation of both demand and supply sides. Just think about all the fishermen and restaurants on Earth! :)

4. Highly intermediated: fresh fish undergoes sometimes more than 8 intermediaries before arriving to the HORECA channel starting with the fisherman and going through auctions (fish markets), fish merchants, delivery networks, bigger and smaller wholesalers, fishmongers, etc. Procsea reduces the chain down to 4 intermediaries and aims at integrating vertically until reaching the fisherman.

5. Where incumbents use suboptimal procedures: I remember Renaud describing his experience working with a traditional offline seafood trader. Big office tables invaded by tons of papers, faxes and telephones. That’s the current status quo. The ideal jungle chaos to be addressed by an online organized marketplace like Procsea.

6. Where there’s a lack of trust. Thus, managing payments is relevant: Procsea provides an all-in-one solution for trustworthy and insured transactions to happen, with a fully-integrated solution, for both supply and demand

7. Logistically friendly: Fish has one of the highest value to weight ratio. Additionally, there are economies of scale in a per node basis. The fresh fish market is distributed in city-nodes where delivery networks have fixed prices for a scale of volumen tranches. Node saturation, increasing liquidity city by city, provides economies of scale in logistics.

High defensibility driven by powerful network effects, brand and switching costs.

1. Strong network effects: supply and demand mutually benefiting from aggregation of additional supply and demand units to the marketplace. More restaurants bring more value (revenues) to fish merchants. More fish merchants bring more value to restaurants due to prices, availability, and diversity being volatile. For further thoughts on network effects, do not hesitate to read our post on defensibility in digital marketplaces.
2. Brand: Procsea is building a top-of-mind brand for the B2B fish market, with a series of trust layers including safe payments, insurances, or quality customer care, etc. Ultimately curation, transparency and liquidity are core elements for the users to perceive the platform as a trustworthy partner.
3. Switching costs: killing pains to both sides of the marketplace and doing so through an integrated SaaS, allows Procsea to generate high switching costs, growing day by day. Why would you change of tech provider!

Solid unit economics powered by strong user retention and engagement/repeat.

In 2.5 years of operations Procsea has achieve outstanding GMV figures and has settled the foundations of a powerful B2B sales machine. Retention and engagement are very high (even above B2B standards) and results from being a SaaS-enabled marketplace, integrating technologically with both their supply and demand, killing all sorts of pains suffered by fish buyers and sellers, and thus, aiming at generating high switching costs (growing day by day) for both sides of the platform. Share of wallet could be particularly high in some client categories, and tech-integration provides an amazing potential for future upselling and cross-selling.

We’re very happy to welcome Procsea to the Samaipata family. This is the beginning of a hallucinating journey to change the fish market forever.

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