Investment - May 2022
The Joule General Partners are pleased to announce the execution of Limited Partnership IV’s ninth investment in an Israeli founded emerging technology company. Below you will find information about the business and corresponding investment. We welcome your questions and feedback.
DEAL SUMMARY
Company Name / Reeco
Website / www.reeco.io
Offices / Miami and Tel Aviv
Sectors / Hospitality, eProcurement, Software
Founders / 4
Year Founded / 2021
Number of Board Positions Held by Joule / One
Total Joule LP IV Investment / $1,700,000
Total Size of Round / $6,150,000
Notable Co-Investors / James Kong (Fmr. Managing Director, BlackRock), Einat Nemesh (GM & Director, Google Israel), Limor Becker (CEO, Hamilton Lane) Eynat Guez (Co-Founder & CEO, Papaya Global), The Naftali Family Office
LP IV Ownership / 8.5%
TECHNOLOGY DESCRIPTION
Like most industries, the hospitality market has been undergoing a digital transformation in recent years. While the bulk of that transformation has centered on the guest experience, hoteliers and property management groups have also focused on optimizing for fixed costs such as human resources, employee benefits, payroll, internet and television, and insurance. However, the variable costs that hotels deal with, particularly procurement of goods and supplies, has largely been overlooked despite having a major impact on property margins. While there are a few platforms out there that aim to make buying food, beverage, as well as cleaning and guest supplies a more efficient process, those solutions are outdated and still require significant time from multiple stakeholders within each hotel. In addition, they offer limited transparency into products and pricing and create unnecessary complexity in receiving and servicing invoices from numerous suppliers at a given time. Yet despite the availability of these procurement platforms, many hotels still rely on direct communication with a single supplier via email, phone calls, and text messaging, which enhances the risk for error and overspending.
Enter Joule’s latest portfolio investment, Reeco, which is developing the world’s first Artificial Intelligence-driven marketplace for the hospitality industry. Through Reeco, buyers are connected to multiple distributors where they have access to real-time inventory and dynamic pricing and through which they receive a single contract and a single invoice, which can be easily processed and paid through their proprietary digital payment solution.
With Reeco, hotel stakeholders can shop across multiple distributors with a single contract and invoice, while gaining real-time transparency into a unified catalog of products allowing for buyers to gain access to competitive and dynamic pricing, while at the same time giving suppliers a the opportunity to broaden their distribution.
Using data and Artificial Intelligence, buyers gain full visibility into their purchasing behavior in order to improve performance and profitability.
Over the last year Reeco has been piloting their technology with a number of hotels in both Israel and the U.S., with Miami being the initial market focus given what appears to be the inelastic nature of South Florida’s hospitality industry (80-90% occupancy even through COVID). The results of these pilots are driving significant interest from other hotels to try out Reeco’s platform:
- 12-19% savings on each order
- 80%+ reduction in the time it takes to place an order
- 48% elimination of product waste from mis-orders or meeting supplier minimum order requirements
MARKET ADOPTION
In 2017 consumers spent $48.7 billion on hotel food and beverage with a CAGR of about 5%. Given the enormity of this market segment alone, Reeco has decided to start their journey by optimizing hospitality F&B buying and are starting with a handful of hotels in South Florida including, but not exclusive to AC Marriott Brickell and Hilton Aventura Miami.
However, hospitality is not the only industry where bulk buying of fast-moving goods takes place. Other applicable market segments for Reeco include retirement and assisted living communities, prison and healthcare systems, as well as catering and event venues.
EXECUTIVE TEAM
Henrik Shimony, CEO
- CEO, ZyvHotel (Israel)
- B.A., Hotel and Tourism Management - Ben Gurion University of the Negev (Israel)
Omri Shalev, CTO
- Software Engineer, Microsoft
- Software Engineer, HARMAN International
- B.S., Computer Science - The Academic College of Tel Aviv-Yaffo (Israel)
Roy Weiner, VP of Sales
- Chief Revenue Officer, Vacayz
- B.A., Hotel and Business Management - Reichman University (Israel)
Jacob Ben Basat, Head of Partnerships
- Operations Manager, Kiryat Shalom Nursing Center
- Intelligence Analyst & Team Leader, Unit 8200
- M.A., Industrial Management
JOULE VALUE-ADD
1. Led a pre-round redo of the company’s corporate governance structure to ensure that it could raise additional capital without any pre-existing voting rights deterring future investors.
2. In the due diligence process, we were able to connect Reeco with a number of prospective customers here in the U.S. including Illinois-based hotel management group First Hospitality and the General Manager of a Bethesda, Maryland-based Hyatt Regency.
3. Also in the due diligence process, we introduced Reeco to Thayer Ventures who are domain experts in the hospitality tech market and could be an interesting lead investor for the company’s next round of financing.
