DeinDeal.ch Launches an e-Commerce Incubator

In Fundraising, Startup Scene by Sébastien FluryLeave a Comment

Adrian Locher, one of the 3 co-founders of the Swiss daily deal platform DeinDeal.ch, presented his company and announced a new incubation program during Swiss Startup Camp 2012 Saturday in Basel.

Before explaining the program, let’s take a moment to learn a little about DeinDeal.ch’s journey.

In January 2010, he and his co-founders were observing Groupon’s success (started just around 15 months ago in the US) and noticed that nobody was doing something similar in Switzerland. A Business Plan written, a 18m2 office rented, 2 employees hired, an investment of CHF 25’000.- and the first version of DeinDeal was launched mid-March 2010. The startup sold 95 coupons during the first 24 hours… number of coupons that are now sold in just 3 minutes (!), which is representative of the fast and amazing growth DeinDeal experienced during its 24 months of existence…
Expanding like crazy, DeinDeal.ch decided to take the acquisition offer from Ringier (one of the biggest media group in Switzerland) after 18 months of operations. Ringier acquired 60% of the company for a valorization price of CHF 30mios, making DeinDeal the biggest recent exit on the swiss web startup scene. Adrian explained that 90% of the negotiation time with Ringier was spent on how to keep autonomy (still running the company as a startup) and only 10% on price…

Now, DeinDeal.ch counts around 150 employees for around CHF 35 mios yearly turnover.

On the question on how they’re different from Groupon, Adrian explained that the company sells a customer acquisition service to retailers, not just making a discounted deal. Where Groupon is getting a lot of anger and criticism, DeinDeal tries to be transparent to the partner and find a win-win deal (for instance, the company takes “only” 30-40% commission), which allows them to build trust on the market. And as Amir (other cofounder of the company) said regarding Groupon competition in Switzerland, “There’s only one trust and it cannot be bought”.

In opposition to common startup advice (go global from day one), DeinDeal.ch doesn’t want to expand internationally and would rather be a big player in a small market (successful example of this strategy is Ricardo, which is the #1 auction platform in Switzerland, which is the only one market where eBay is #2!)). But the company won’t limit itself to group buying deals (which was by now a wonderful and efficient way to acquire users), but aims to develop itself as a large e-commerce player.

And Adrian then explained their growth strategy: build 10 new e-commerce startups until 2015 thanks to incubate@DeinDeal.ch’s program!

The company is looking for entrepreneurs with innovative e-commerce ideas, who’ll spend 6-12 months at DeinDeal.ch, working partially on special internal projects (like reorganising sales, intranet, re-shaping existing departments). These projects will allow both parties to learn each other and and share common values.

DeinDeal is providing the EiR (Entrepreneur-in-Residence) a decent salary and even a housing (already rented 2 flats!), a solid know-how in online marketing (and an interesting customer base of around 500’000 registered users, for 1.2mios visits per week), an infrastructure and a team (you’ll have software developers to code the project, for instance). Simply said, EiR can focus his efforts on developing the business and not all the “less value creating activities” like controlling, accounting, etc.

What is also really attractive to the incubation program is to have Ringier as an investor (they’ll back the startup) and a potential buyer (Ringier has a call option on 3-4 years to buy the whole startup).

Of course, the entrepreneurs won’t have a majority stake in the company but still get 15-30% (it depends of the financing needs) of the equity, which is still attractive regarding the lowering of the risks linked to starting on your own! With incubate@deindeal.ch, you get a strong distribution channel (remember the 500’000 customers base) and some strong financial security, added to the know-how of people. And you still get the opportunity to cash out at least CHF 2 millions if the project is successful… Too attractive to be honest? No, it’s real!

The first e-commerce spin-off incubated by DeinDeal will soon be launched and centered around innovative shopping club.

In my opinion, DeinDeal is demonstrating that startup can succeed on a small market like Switzerland and can be shown as role models for swiss wannabe entrepreneurs.  Yes, everyone can criticize the “me-to” aspect of DeinDeal, but I’d like to quote The Next Web:

It's never too late

And launching incubate@deindeal.ch program is a clever way of just doing it better! DeinDeal hopes to kickoff its business thanks to the program but will also help the swiss web startup scene grow further…

You can find the slides of Adrian (in German) here. You can also read a post on the same topic on Startwerk (also in German).