Until now, you had no relationship, as far as is known, with the hospitality sector. How did the Vanadi Coffee project come about?
It’s true, I don’t have any experience in the hospitality industry, but I didn’t have any experience in football or biometrics either. The project was born from the idea of trying to professionalize the bar sector in Spain. We realized that there are powerful brands in the sector located in strategic places, such as Starbucks, which in Spain is only positioned on premium streets, but not in neighborhoods or on the outskirts of cities. However, in the United States there is a Starbucks in every neighborhood, almost on every corner of every American city. Our idea is to replicate this model of Starbucks in the United States: to create a brand that has a presence in premium places to gain recognition and expose our product, but then to grow on the perimeter, not to be located only on the most famous streets.
Is there a niche for a new operator in a sector as mature as hospitality?
Totally. In fact, we believe that there is more of a niche in the periphery than in the premium streets, because who we want to compete with is the small bar. Our niche is breakfast, coffee, and we believe that, with the economy of scale of a chain, we can compete on price with small bars.
What else does Vanadi bring to compete?
We want to contribute above all technology. We are developing a program to be able to pay when you want. One of the most infuriating things is that the customer is used to waiting to be served and staying as long as he wants in a cafe or restaurant, but there is one thing that most people don’t like at all: having to ‘waiting when he wants to leave and having to call the waiter five times to pay. And then the time that is lost, because you call the waiter, he comes, brings you the bill and, if you want to pay by card, he has to find the dataphone again. We want to be able to pay from the table with a QR code and to be able to get up and leave whenever you want.
Will the chain enter home delivery?
Not yet, but it’s on the road map.
You’ve touched on the technology issue, but what do they offer from a product standpoint?
We will create a workshop to be able to supply the first 30 cafes that will be in Alicante to have an artisanal product made from here, from the city. We want the product to be as industrial as possible. A small bar can’t afford to have all the handmade pastries and that can set us apart.
Where do your expansion plans go?
We now have four cafes open and five in the works. We want the first 35 in Alicante. After all, we are from Alicante and that is where we will start the expansion. But for the exit (to the stock market) we want to have flagships in Madrid, Valencia and Barcelona.
In the medium term, the goal is more ambitious: they are talking about 90 cafes in three years…
Yes, the goal is more ambitious, that’s why we want to go public, to finance growth. This is a mature business with a recurring income, but it needs quite a bit of cash to open. The average cost of opening a Vanadi is between 200,000 and 250,000 euros, which means that to open ten Vanadi you need 2.5 million. The fact of going to the market is to get this financing and open between 30 and 35 premises every year.
What investment is planned in total?
At the moment, 2.1 million have already been raised (in investment rounds); now in February we started a round of two million capital expansion and at the stock exchange we will do another one of three million.
He says they want to combine some flagships with a wider network in the neighborhoods. Are these cafes in premium areas profitable on their own or only as promotion and branding?
Initially we thought that it would only be profitable because of the brand, but the truth is that the cafe in Maisonnave (the most commercial street in Alicante) has been profitable since the fourth month. I thought it would be a purely marketing investment, which would cost us money.
Why go public and not resort to another type of financing, such as banking?
Growth with financial debt at such an early stage of a company is very dangerous. The healthiest thing is to increase capital and have the minimum possible financial burden. At the point when we have enough profit in the stores to be able to support a financing we can consider it, but right now the best thing is to dilute the shareholder and have no debt. At the moment Vanadi’s debt is zero. I prefer to have 10% of a solvent company, without debt, than to have 50% or 60% of a company with debt, which I think in the end is what causes the risk of disappearing.
Are Spanish companies too dependent on bank financing?
Probably, yes. Look, when it comes to going public, the problem that many see is the transparency requirements, but if you get the idea that the company is not yours, that it belongs to all the shareholders and that you have to be transparent , the ease of financing you get in return is enormous.
And why do you think then that Spanish companies prefer to go to the banks before going public?
To avoid dilution. Many entrepreneurs would rather own perhaps 100% of a company worth a million than own 20% of a company worth a hundred. But I think this is due to ignorance of the benefits it gives you, more than anything.
Are the procedures to go public very complex?
Not at all. You need to set up a limited company and then there is a series of transparency processes, which is to do financial, legal, labor and tax due diligence. In other words, we need to expose through a third party that we are transparent and that everything is in order, and do an audit.
It’s done, you…
Maybe it’s because it’s my third time, but really the process is very simple: take everything out of your drawer and put it on the table. People would be surprised at how simple it is.
How do you rate your previous experiences taking first the technological company Facephi – expert in the development of biometrics software – and then Intercity, the first Spanish football club to be listed on the stock market?
Very positive In the case of Facephi, the company already invoices more than 20 million and earns a lot of money. If we hadn’t gone out to quote it would have been impossible. When Facephi went on the market it had 25 employees and now there are almost 250. The same happened with Intercity. The capital that has been raised with the IPO and with the successive expansions has meant that the team has risen four times in five years. Without these funds it would have been impossible.
The first company they set up ended up closing…
Yes, it closed in 2012. Sometimes the problem is not having a mature technology, but having a technology too early, which is just as bad as being late. We came too early to offer our technology because customers couldn’t really use it: in 2007, nobody could authenticate with their phone camera because they didn’t have a front-facing camera. We held on as long as we could. When the company closed we were left with nothing, but with the know-how and decided to create Facephi. In 2014, the first bank opted for us, and since then, there are now more than 200 entities using Facephi’s technology.