EspressGo...ing - Why we’re Closing

I guess this is goodbye. I’m sorry to say that EspressGo is closing its doors from 1st April 2018. It’s been a hell of a ride, but all good things must come to an end.

In this article, I’d like to explain why we’re shutting up shop, but also give you some tips on how, if you run a startup, you might be able to avoid a similar fate. I’ve always tried to be transparent and put everything out there, why stop now?

Cash is King

To put it simply, the reason we have to close EspressGo is because we’ve run out of cash. 

As with nearly all startups, we had never planned to be profitable from Day 1, we were planning to move towards profitability as we scaled. We had hoped to secure a round of funding from VCs to see us through to that stage, but we were not able to do it. It’s therefore not possible to carry on with the ambitious plans we had for EspressGo.

Why?

As you can imagine, we worked extremely hard to achieve funding from investors. We made calls, pitch decks, meetings and presented - a lot. We didn’t want to have any regrets that we didn’t work hard enough...

However, from nearly all of the VCs that we visited, presented and who had replied to us, the feedback was the same. We were lacking in 2 key areas.

• Market size - the first concern was that the market we were trying to serve was not big enough to achieve the returns that the VCs were looking for. 
• Clarity – the second concern was that we had not proven our case clearly enough. Other companies had previously failed where we were trying to succeed. We could not show them clearly enough why we were different.

Question everything

If you’re running a startup, especially one that is about to look for VC funding, you can learn from my experience. Ask yourself these 2 questions. If the answer to any of them is ‘no’, you need to work harder on your proposition.

• Is my market big enough?
• Am I different enough?

Chris Corbishley from VC firm, Forward Partners, wrote a great article about this. It turns out that I’m not alone. Chris tells us that they offer investment terms to 0.2% of the opportunities that they see. Out of the huge amount of applications they turn down, 29% of them are because they believe the market isn’t big enough, and 32.3% are because the offering isn’t different enough.

Regarding market size, Forward Partners have a formula which they use to calculate whether or not to invest in a startup. When they exit, they want to return ￡60 million back to their investors. Therefore, if they take a 10% stake in a company, the exit value of that company needs to be ￡600 million. For a 25% stake, it needs to be ￡240 million, and so on.

With various revenue multiple and market share formulas also added in, the rule of thumb is that for Forward Partners to take a 10% in a startup, their addressable market needs to be worth more than ￡600 million.

Regarding differentiation, Chris tells us how so often, the offering doesn’t stand out far enough from the crowd. They’re only different from something else already out there due to 1 or 2 extra features, and that isn’t enough.

At EspressGo, we were not able to get over these obstacles. When you’re in this situation, make sure you are.

Don’t be Disheartened

Here’s an entrepreneur secret. We never started off with thinking we are going to be building a product to serve millions of users or have 30,000 coffee shops globally to start off with.

Start small. EspressGo started off with 1 coffee shop and a handful of customers to see if there was a need. Then we gained our second coffee shop, then our 10th, 25th, 50th and so on... You have to learn and gain customer feedback along the way. Once you have the need you can develop your product to scale.

Every business and opportunity you are faced with comes the experience you need to succeed for your next plan. Even if it didn’t work last time, in order to overcome failure, you need to gain perspective from the circumstance. In other words, failure should make you stronger. Failure is imminent in any business, but its always the people who learn about themselves who make the most of overcoming the situation. Don’t be disheartened.

No Regrets

So there we are. Running EspressGo has been an amazing experience.

We had a vision: ‘Click and Collect’ for coffee & snacks EVERYWHERE and we started off small by working with independent coffee shops in London to validate the idea.

We gained incredible traction with 000s of users, buying customers and some incredible partnerships.

Thank you

The last 18 months have been a journey to say the least. There have been the highest ups and the lowest downs but I couldn’t have done any of it without the team; Avi, Matt and Ross and the various amazing people that we have worked with to make this happen. From our developers to our finance team it’s been a group effort. Our partners and our customers have been amazing in sharing this journey with us and I want to thank you all for what EspressGo has become.

I’ve learned more than I ever imagined, met some incredible people along the way and most of all, it’s been great fun. 

Thanks for everything, and I’ll be back soon. 

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Edoardo has a series of blogs that can be found at www.dhirubhai.net/in/edoardocannarsa @espressgoapp @edoardocannarsa