Next 18 Months
BUILDING TO SCALE
Where we are today
Through the excitement of the last 18 months, we’ve glimpsed at the enormous value that our tech-enabled, 100% transparent supply chain will deliver to the global fishing industry.
As fishermen benefit from an average growth of 30% in the value of their landings, chefs, fishmongers and now fish merchants are flooding to source catch directly from boats for the first time ever.
Having launched our own port, we've helped return opportunities for skilled coastal employment, while consumers - with new access and information - are eating cheaper, more sustainable species.
With the data of every fish landed and sold through our chain, our catch projection model now helps every buyer on Pesky’s App make better informed decisions based on what’s likely to be fished tomorrow, rather than just what’s landed today.
What’s clear is that the days of the traditional industry are numbered. In spite of all of the benefits we’ve generated for others in the chain, every customer has come organically, every fisherman has been retained and every kilo of fish has made a profit.
We now have the validation that we can rebuild this industry on a foundation of transparency, making it both economically and ecologically sustainable in the process. It’s time to take the next step on that journey.
How Pesky will scale in the future
In light of what we have learned in the last 2 years, we strongly believe that to rebuild the industry, Pesky must become the infrastructure that the entire chain is dependent on. This will allow any fisherman across the world to land into their local port and sell their catch with 100% transparency to any buyer on one of Pesky’s platform.
To achieve this, we are now focussing our efforts on the base of the value chain - namely the port auction businesses where every fish is landed and sold. By helping these businesses become more economically sustainable through the use of our hardware/software product, we not only inherit access to the supply, demand and data of their port, but the operational base to distribute to any customer, directly. In addition, this approach helps us to build considerable defence from existing and future competitors who, themselves, will become reliant on sourcing catch through Pesky’s platforms.
Importantly, this is not an entirely new concept to the industry, with many port auction companies, and therefore their existing buyers, already moving to digital markets to help generate greater returns. However, by offering a larger take rate, combined with a higher average price of fish, our experience with these auctioneers gives us the confidence that we can scale our product into any port auction (and aquaculture business) - gradually growing into the largest fish market in the world within the next 4 years.
Finally, as you’ve heard me say many times, the long term value in the business will be the applications of the data generated from both sides of the chain. However, it can only be realised once we have established ourselves as the infrastructure to link supply and demand, bringing with it a sufficient volume of data. Therefore, we have chosen not to dilute our focus and resource over the next 12 months, instead focussing purely on the products that will help us scale both sides off the chain and build this data set for future use.
The next chapter - 2020
Our next strategic milestone will see us deliver the product infrastructure to begin scaling into port auction companies and market the entirety of their landings to buyers at every point in the chain.
In order to achieve this milestone, from the 2nd of January 2020, we will be focussing every effort on achieving two core objectives, namely:
To develop a Scalable Port Operation Product that can integrate into existing port auction companies and demonstrate an economic uplift for their businesses.
To demonstrate that wholesale buyers at every point in the chain will source fish through Pesky’s Wholesale Market Platform - bypassing their existing agents and intermediaries.
1. Scalable Port Operation
2. Wholesale Market platform
Key elements to the delivery of these objectives
Supply - Developing the supply base to support our growing demand channels.
Expand Torbay micro-port - From January, we will continue the fit out of our Torbay micro-port as the test bed for all hardware and software components of the Port Operation Product. Given how successful the early landings have been in terms of attracting fishermen and buyers, we will use the new facilities to bring on 4x the volume of supply - not only testing our port operation product, but also providing considerable liquidity of high quality fish for our demand channels.
Take over an existing port - Supported by the controlled tests within our Torbay micro-port, we will use this much larger 2nd port (£1m-£2m of fish) to bring on a considerable increase of supply, while demonstrating that we can handle an entire ports worth of supply of fish through our demand platforms (chefs app, wholesale market platform and local dutch auction). Following 9 months of diligence, we have 3 options of ports to expand into - Looe, Lowestoft and Rye - and will be making the decision on December the 14th. By the end of 2020, this project will not only provide the blueprint for expansion into other auctioneers, but evidence of the potential economic uplift that these businesses could realise by integrating with Pesky’s network.
Launch aquaculture producers into the Pesky network - With farmed produce making up a considerable proportion of the fish traded nationally and across the world, we will begin to work with producers in the main categories of salmon, trout, oysters and mussels to add their stock to our marketplace. Alongside the growth in wild fish supply from the ports mentioned above, this will support Pesky’s ability to serve as a one stop shop for a buyer’s fish needs. From mid January, we will begin to work with Wester Ross Salmon, Chalk Stream Trout and Brixham Sea Farms - acting as their business development resource to sell to points further up the chain. Given the value that such an increase in demand presents to these businesses, there is a strong likelihood that this channel could grow much faster than we currently anticipate.
Tech, Ops and Demand - Developing the core product infrastructure to deliver value for all points in the chain.
Port Operational Product - Enabling a port auction company to receive, record, prepare and pack fish for delivery in a standardised process flow that enables them to participate and benefit from Pesky’s trading windows. Will be a combination of hardware and software to support a plug and play model.
Wholesaler Market Platform - A single platform that enables fishmongers, merchants and exporters to source catch directly from boats, ahead of the local morning market window. In its first iteration, it will act as a simple fixed price marketplace, integrating the availability generated from the port operational product, our existing traffic light catch forecast, as well as the ability for next day delivery across the UK.
Outsourced Dutch Auction capacity to support local buyers - The reaction of local buyers was one of the main challenges identified through the initial raise process, with concerns that they would block our entry into ports if we become a threat to their access. To overcome this, we had originally looked to develop a dynamic priced dutch auction market for these local buyers to source catch through. However, this route was not only going to be costly and time consuming, but a considerable dilution of our focus. Instead, we have approached the challenge in a different way and have started to work with Aucxis, a Belgian E-Trade company who provide Dutch Auction software for 60 fish markets across the world, including 2 of the 3 largest English ports. Not only does this help us reduce our tech budget by >£200K, but we will be able to implement their solution almost immediately within our ports. In addition, we’ve both observed the potential of a more structured partnership later down the line that could see us expand an integrated offering into their existing auction customers across the world.
Evolved Chefs app and procurement software API - In addition to the development of the chef’s app, we will build a basic API to integrate our live availability with the ever-popular procurement software systems that are being adopted within the hospitality industry. This will enable us to onboard and support larger restaurant groups.
Team - Building the team for this milestone and beyond.
Head of Product - Our most important hire to date. With the focus on the development of the two products mentioned above, we have chosen to put a seasoned head of product as the leader of our engineering team. We brought in the support of Jon Dweck, CEO of Pod Talent, who has been working with us to find the best possible person for this role. Following dramatically greater success than the first time round, we are interviewing through early December, with the intent to have them in role from March 1st.
Head of Restaurant Sales - We are in the final stages of the hiring process of a seasoned head of restaurant sales with extensive experience in seafood sales roles. They will be responsible for the ongoing management and development of the restaurant proposition as we expand nationwide from January - working directly into myself. While the formal offer will go out on the 14th of December, we are also confident that this individual has the potential to progress to a broader head of commercial in coming years. We intend to have them in role from the 2nd week of January.
Head of Wholesale - With the responsibility of developing the demand pipeline to support our Wholesale Market Platform, we have focussed on placing someone with extensive industry experience who is familiar with the networks and currents within the UK wholesale market. Therefore, we focussed on senior buying managers or buying directors of existing national or large scale fish merchants and have a shortlist of brilliant candidates that we will continue to interview up through January, with the intent of them being in role from March to complement the introduction of the new port.
What we have chosen NOT to focus on
Retail: While our platform will eventually enable retailers to source their catch through Pesky, we would have neither the supply or resource required within the next 18 months to operate any execution greater than a pilot project. In addition, given the health and safety that surrounds retail food preparation in the UK, it would be a considerable drain on port resource to be able to support. We will continue to review, but it is not currently in scope.
Direct B2C: Again, as with our desire to support retail, a B2C model is something we want to enable in the future. However, given its operationally complexity, acquisition cost as well as internal resource, it would only ever return very small volumes at a point when we’re trying to drive maximum weight through the chain. It is likely that any execution in the next 18 months would be in conjunction with a fishmonger or other B2C channel, but it is not currently in scope.
Beyond this milestone
Once we’ve achieved the two objectives, our next strategic milestone and Series A strategy will see us scale our network of auction companies as well as expand our demand market in the UK and abroad. At this point, our focus will be on building the robustness within our product architecture to cope for rapid expansion, to then flood it with as much throughput as possible to maintain our first mover advantage
Having built the core functionality of the port product and market platforms described above, we anticipate that our development team will grow quite considerably as well as the port and sales resource to support such a rapid expansion.
Therefore, we anticipate that we will be looking to raise upwards of £5m+ at our next round which we aim to start in March 2021 with the objective of integrating with the 3 largest English ports within the following 2 years.
Having refined our focus to solely achieve these two objectives, we revised our raise total to £1m at a pre-valuation of £5.5m. There will be no complicated terms, enabling us to keep the legals light, while every personal investment is eligible EIS.
In terms of investors, the focus of this round has been to bring in the best possible group of people and experience into the team, and that’s exactly what has been achieved. With founders and CEOs of food, trading, data and software companies - just to name a few - alongside our phenomenal bunch of existing investors, we are well supported.
Finally, in terms of institutional funds, we have built a great relationship with the team at MMC who have put a small commitment into to the upcoming round. They’ve been with us since day one, have always asked the right questions and challenged us in the right areas. I’m pleased to have them on board.
Outside of equity funding, we will submit two grant proposals before the end of the year; Up to £2m from the Goverment’s MFF as well as £250K from the European Space Agency for the development of the data. If successful in our bids - and we’re confident on the MFF based on first conversations - this would see us dramatically accelerate the development of the product architecture within the next 2 years, while extending our runway to provide even more validation ahead of our next funding round.