myflexbox: revolutionizing last-mile delivery I part 2

Corporate Entrepreneurship Stories #4: myflexbox – A corporate venture of Salzburg AG – Part 2

Part 2 – myflexbox’s investment and expansion plans into the German market

This is the second part of our interview with Jonathan Grothaus and Lukas Wieser, co-CEOs and founders of myflexbox, a corporate venture of Salzburg AG. In the first part, we discussed the origins of myflexbox and the founders’ personal journeys. In part 2, we discuss myflexbox’s substantial investment aimed at fueling its expansion in Germany. We also delve into the company’s ownership, growth plans, and vision to reshape urban delivery with sustainable solutions.

Utilizing the core assets of the mother company is a key success factor of for corporate ventures. How relevant was this aspect for myflexbox?

Jonathan: Oh yes, absolutely. Ultimately, we could have never built a company like myflexbox without the assets of Salzburg AG. First, it takes significant upfront capital investments to build the technology and infrastructure for such a solution. Second, it requires long-term trust and commitment from customers and partners in building a network. We already had this trust, given Salzburg AG’s reputation as one of the largest infrastructure providers.

Lukas: However, it was still a delicate balancing act. We faced a major decision: Should we follow our own path or continue under the Salzburg AG brand? We opted for the first option in 2019, setting clear growth objectives. Yet, we also needed to maintain support from various internal stakeholders, for instance from the legal department or sales. Things had to move quickly, but we also needed to be realistic: You can’t just rush into the legal department’s office the day before signing and request a review of a 20-page contract.

Jonathan: In my view, many corporate ventures fail due to structural reasons, they don’t utilize their unfair advantages and corporate assets. It’s vital to continuously strike a balance between entrepreneurial freedom and drive, strategic use of assets, and coordination with the corporate realities and all involved stakeholders.

Good vibes for the Pioneers visitors with the myflexbox founding team in front of one of their packet stations

Last year, you realized a buyout with a substantial investment from the British private equity company Star-Capital. What motivated this external investment, and how has it been utilized?

Lukas: For both us and our partners, rapid expansion was a logical developmental step. We had already identified Germany as our next target market due to its tenfold market size compared to Austria. However, the trust we had established in Austria was not necessarily present in Germany. Salzburg AG is recognized here but no one in Kiel is waiting for an Austrian player to disrupt the smart cities infrastructure market. (laughing)

Jonathan: So we asked ourselves the question: How do we establish trust beyond Austria? The solution was clear: with additional funding and a well-defined growth roadmap. Our investment of over 75 million was a crucial factor in establishing this trust. It demonstrated our commitment to building infrastructure with our partners for the next 10 years. Our primary asset during negotiations was the support of one of Austria’s leading infrastructure providers, which reinforced our investment case.

What does the ownership structure of myflexbox look like today?

Lukas: Regarding ownership structure, Salzburg AG still holds a significant share, Star Capital is the majority owner and we, the founders, also own a minority. Star Capital is a private equity firm from London, and they are very experienced with infrastructure investments. Of course, our shares are smaller than those of a founder of a classic start-up on the open market, but we are well incentivized and have built myflexbox also with and for Salzburg AG.

Let’s look a bit at the future: What are your growth targets for the next few years when it comes to market expansion?

Jonathan: On one hand, our focus is on consolidating our existing market. In an area where we have already built up a significant market share, it is important to stay relevant. In Austria, we are currently as big as the Post with our open network, so definitely relevant.

At the same time, as already mentioned, we plan to grow abroad. In Germany, we are already relevant and, after only one year, the third largest player after DHL and Amazon’s network stations. However, there is still a lot of growth potential. We plan to transfer the same footprint as in Austria, where we have over 500 locations, to the ten times larger German market, with a focus on the major agglomerations.

Overall, in Germany we are talking about a very high Total Addressable Market, so there is enormous potential for the future: 4.5 billion parcel circulate here annually with a growth rate of 6% p.a.. Capturing just 1% would mean that we would handle 46 million parcels…

What is your vision? How do you see the market development in the last-mile delivery infrastructure in the future?

Jonathan: Our vision is based on three main pillars: sharing economy, open systems, and inclusive, versatile platforms. There will be several large players in Europe who will build open networks and compete in various markets. Our main focus remains, of course, parcel delivery, but we want to use our more than 50,000 compartments available in the overall network for other purposes as well. We are thinking about the sharing economy – why not hand over tools such as a drill at such stations in the future between households? Why not circulate products from Willhaben or Vinted through such stations?

Lukas: However, Austria has to make massive progress in the retail sector in order to not lose touch. The stationary trade will increasingly lose influence, especially in the FMCG sector. In e-commerce, we mainly rely on foreign players, as no large Austrian one has established itself. We believe that there is great potential in the entire e-commerce sector,  and we want to advance this together with other stakeholders in Austria!

Thank you Lukas and Jonathan for the great converesation! And all the best for your further journey with myflexbox!