Understanding Venture Capital Trusts
17 May 23
17 May 23
Founder Market Fit
Does domain expertise help a founding team? The iconic contradiction is PayPal, a team of up-and-comers powered by raw tenacity and IQ, or Elon Musk in seemingly … everything? Logic follows that a level of naivety is what’s needed to recreate the rulebook of a given vertical. Radical ideas come from outsiders.
But what if you can have the best of both worlds?
A Fund Manager Walks Into a Chicken Shop
Well not quite, but in the case of Nory’s Founder, Conor, restless with life in fund management he decided to start a chain of chicken shops — Mad Egg. 5 years later, this relative outsider had helped turn Mad Egg into one of Ireland’s fastest growing independent restaurants with 5 locations, over 100 people and boasting EBITDA margins 3x the sector average.
Restaurants are hard, punctuated by low average net profit margins (2–6%) and high staff turnover (c.60–70% p.a.), it’s a constant battle to manage costs. Faced with these problems and disillusioned with the software available to address them, Conor looked to leverage data and ML to better inform his operations.
Once again restless, Conor decided to codify his learnings in software, starting Nory in 2020 to help hospitality venues more intelligently manage their business and restaurant operations.
The product is accessed via mobile app or web-based and currently has 3 core components:
Since launching in 2021 Nory has expanded across 5 countries and now services over 200 locations, including customers like Stonegate, Dr Juice and Viva Italia. Key to Nory’s rapid roll out has been their ability to cross the minimum algorithmic performance hurdle and deliver actual value, with customers reporting up to 20% increases in EBITDA.
We are excited to be partnering with Conor and the rest of the Nory team to help fuel their next stage of growth by co-leading their €7m Seed round alongside Samaipata and existing investors Cavalry, Playfair & Anamcara Capital.
Data, data, data, data
It sounds simple, just use your data, duh. So, what’s the issue? Nory are certainly not the first to address the hospitality industries problems with software, but perhaps that’s the point. Hospitality groups turn to restaurant management software to drive operating leverage, looking for solutions to better manage payroll, staff scheduling, inventory management, procurement, food waste, compliance & safety etc.
The status quo for a hospitality group is to rely on either:
At the enterprise level customers tend to opt for the former, but as corroborated from our references, these solutions offer poor UX and sub-optimal analytical insights due to architectural constraints.
Those creating their own tech stack by procuring multiple point solutions from separate vendors face high cost, a time-consuming selection process and importantly, data silos and a lack of interoperability between each vendors semantics & data schemas.
Interoperability prevents a restaurant having a unified data source, thereby inhibiting their ability to maximise the incremental operating efficiencies ML can generate through accurate forecasting of demand and business performance.
Much in the same way Toast, Olo or Sunday are consolidating front of house point solutions around their platforms, we believe Nory has the potential to become the de facto solution for restaurant management.
Key to Nory’s value proposition is their decision to integrate with customer’s other business systems (accounting, PoS, payroll), thereby positioning themselves as an important system of record, holding the unified data source within an organisation.
This business data combined with exogenous factors like weather, events and seasonality are modelled to provide hourly demand forecasts. In turn, these forecasts enable Nory to provide more intelligent insights throughout their product, i.e. auto-scheduling the rota or informing inventory management based on predicted demand
While the increasing penetration of cloud PoS systems is undoubtedly a tailwind for Nory, they are deliberately not building a PoS. In our view, this is ultimately the system of record for the front office of a restaurant, remaining agnostic to these vendors and adopting an integrate and surround approach enables Nory to retain flexibility, avoid unnecessary competition and maximises their ability to capture business data.
We are excited to be partnering with Conor and the whole Nory team as they aim to drive operational efficiencies for the hospitality industry, globally!