How non-tech start-up are creating turmoil

Oatly Start-up commotions the non-tech segments
Image taken from oatly.com

Oatly Start-up commotions the non-tech segments

One of the four companies or start-ups at a global scale, that have become an unicorn in the past month of July, with extra merit due to the current COVID-19 circumstances that add to the global VUCA status (Volatility, uncertainty, complexity & ambiguity), has nothing to do with software, nor fintech, or any type of tech-base business model, which we are more used to see in the unicorn stratosphere.

 

According to the monthly Tracxn unicorn report,  the Swedish oat milk manufacturer Oatly,  raised $200M in a series C on the 14th of July, therefore, adding to the $32M raised in different series A & B since 2006, has given Oatly a total funding of $232M.

 

I have had the opportunity to visit Sweden several times per year for the past 15 years, and travelling form the southern region of Skane to Goteborg or Stockholm, you cannot miss the Oatly sign just outside their main factory in the region. I consider myself a specialty coffee amateur and wherever I travel I try to taste locally roasted & brew coffee and usually infused with oat milk, so I have been able to follow and appreciate their market development at a macro scale. What strikes me is more the fact that a non-tech based company (I would not even call Oatly a start-up but a consolidated company), has reached a $200M funding from the equity investment multinational Blackstone, and other investment individuals such as the famous TV entertainment Oprah Winfrey. So, I was surprise to learn that Oatly had not been purchased by a larger beverage’s transcontinental corporate of the likes of Nestlé (current competing against Oatly), PepsiCo or even the Japanese Ueshima Coffee Co (UCG).

I was surprise to learn that Oatly had not been purchased by a larger beverage’s transcontinental corporate of the likes of Nestlé (current competing against Oatly), PepsiCo or even the Japanese Ueshima Coffee Co (UCG).

One of the reasons why Oatly has been considered a start-up might have been its fast turnover growth within one year. Within 2 quarters in 2019 (Q2 to Q4), their turnover has nearly double from $22M to $43M.

Oatly infographic Total_Number_of_employees
Image taken from the "Sustainability report" by Oatly

Another reason for considering Oatly a start-up might be its market valuation of $2B, or the fact that its biggest competitor Califa Farms, raised $225M 6 months early (Jan2020).

 

According to venture capital media, one of the main problems that has limited the growth of Oatly in the past decade, has been its restrained production capacity (I still remember the Oatly shortage during the first quarter 2019, or its astronomical asking price in marketplaces such as eBay). So, such large investment comes along an international expansion plan, with expected production units in the US, Europe & Asia.

 

Another reason for such an impressive valuation, is the potential of subproducts made with oat, that can be promoted & easily introduced in the market. Products such as the Oatly Ice cream, or Oatly Caffe Latte, again competing with the likes of Starbucks coffee.

 

This new investment comes along great market pressure by global Oatly fans who have questioned whether a loss in the original values of their founders as, could be transformed by investors which apparently are causing trouble in the Amazonas or are just looking for a fast return on investment undermining Oatly’ s followers earth & human values.

Oatly We promise to be a good company
Image taken from the "Sustainability report" by Oatly

It will be interesting to see how other companies in non-tech segments use this case study to develop their market expectations & look for investment to speed up their growth. Or how large investment corporations, expand their star-up portfolios by investing in other traditional markets such as the food, construction, law or even children.

 

Corporates are venturing nowadays in markets or segments that are way out of their core business, due to their aim to diversify their assets and to escape from market fluctuations. Most corporate executive teams or C-level managers are aware of the 5 stages of technology adoption, and in order to increase, or at least retain, their share in the market and shift that curve form the late majority user need to redefining their investment portfolio. We might take as an example Facebook´s strategy by purchasing Instagram for $1B back in 2012.

 

My recommendation would be for corporate to start redefining their future scenarios by searching for technology trends, user behaviour and by investing in founding new start-ups from scratch or purchasing large shares from start-ups that would be willing to join their team or even move their office to their new corporate funding partner.

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