Mews and Deepki: Lessons on scaling, transformation, and sustainability
Part of Revaia’s core mission is to help late-stage startups scale and reach their potential. But even for companies that have made it through the treacherous early stages, the journey is never a straight line and success is still far from guaranteed.
That’s why we think founders have a lot to learn from two of our portfolio companies: Mews and Deepki. Vincent Bryant, CEO and co-founder of Deepki, and Matthijs Welle, CEO of Mews, joined us at Revaia’s 5th Anniversary party for a conversation about their scaling strategies, including how they’ve leveraged M&A, navigated the recent economic turbulence, and embraced ESG principles.
Each company started with ambitious visions and inspiring founders. They both had to deal with the unexpected in the form of an economic downturn that hit their respective companies in very different ways. The grit and resilience with which they’ve responded has left them in a strong position to pursue their goals.
First, a little background on the companies.
Vincent Bryant co-founded Deepki with Emmanuel Blanchet in 2014 because they recognized that the built environment is responsible for more than a third% of CO2 emissions. From construction to daily use and eventually end-of-life, every aspect of the building contributes to these emissions. The pair believed they could impact this problem by leveraging existing building data to help the real estate industry transition towards net zero.
Deepki’s ESG data intelligence platform automatically collects and aggregates data from buildings and then identifies the right KPIs to help owners and managers make good investment decisions that reduce their carbon footprint, whether that’s a renovation project or optimizing daily functions like HVAC or lighting.
We invested in Deepki’s €150m Series C round in March 2022 via our 1st fund, Revaia Growth I. The company now has over 400 employees and operates across 60 countries. It has signed a unique partnership with global market-leader CBRE and was selected to participate in the RealAssetX Innovation Lab, powered by PGIM.
Mews has developed a property management platform that powers digital transformation for hotels. Richard Valtr founded Mews in 2012, and Welle joined the following year, becoming CEO in 2017. Both came from a hospitality background and understood first-hand how antiquated the technology used by hotels was, and how that negatively affected the ability to serve guests. Even today, the company estimates that 80% of hotels use on-premise systems that have limited functionality and poor security.
Today, the Mews Hospitality Cloud provides an integrated solution that enables payments, customer management, and a marketplace of new digital services. Indeed, payments are a key part of how Mews makes money.
In December 2022, we invested in Mews’ $185m Series C round via our second fund, Revaia Growth II. The company now has over 900 employees and serves more than 5,000 hotels in 85 countries.
While both companies now have tremendous momentum, they had to make some critical choices across three areas in recent years to achieve that.
Economic Headwinds
Deepki’s customers were particularly impacted when central banks started raising interest rates. The drop in liquidity has been accompanied by slower sales of real estate assets. Property owners are worried about protecting the value of their assets, which could lead us to imagine a shift in focus away from investment in extra-financial performance. This couldn’t be further from the truth, as ESG performance is critical, not only to protecting, but maximising asset value.
As new ESG regulations come into play, these same property owners are forced to find ways to make investments that will help them comply. When seeking funds to refurbish properties, the absence of a net zero pathway acts as a barrier to accessing capital.
So while there has been a slowdown in short-term spending on properties, Deepki continues to grow, as owners and managers try to ensure that environmental performance is at the heart of their wider company strategy. They need to make the necessary investments while also being as efficient as possible with capital, and it’s not always easy to prioritise these efforts. For this reason, companies are increasingly turning to solutions and partners like Deepki, which is singularly placed to provide clarity and direction.
“It's absolutely key for them to gain a comprehensive understanding of their portfolio by monitoring the correct KPIs, in order to take action, measure progress and increase their asset value,” Vincent said. “And this is what we do.”
For Mews, the one-two punch of the pandemic and the economy initially hit even harder.
When Covid brought almost all travel to a halt, hotels closed their doors and the company lost the revenue stream from fintech transactions in 2020. With only four months of cash in the bank, Mews had to slash its headcount from 450 to 220 to reduce its burn rate.
But a few months later, the market shifted gears. With hotels empty, owners decided it was a great time to replace their IT infrastructure. By the fall of 2020, the industry was accelerating its digital transformation plans and Mews was right there to catalyze these changes.
In addition, while higher interest rates have stymied new hotel construction, existing hotels are now trying to keep up with the competition by modernizing while also struggling with tough labor markets. And those higher interest rates have also boosted the company’s fintech-related revenues. By the end of 2022, the company had reported 175% year-over-year revenue growth.
“It feels very counterintuitive when a lot of startups are just trying to get to profitability,” Matthijs said. “We're like, ‘We need to grow faster. How do we do this?’ Because right now, there's such an opportunity in the market for a hospitality system.”
M&A Opportunities
Mews has now acquired 7 companies. It has even created Mews Ventures, a dedicated M&A team to fuel growth and innovation.
Matthijs said Mews has two strategies when it comes to M&A. The first is buying a legacy company and then sunsetting its technology and migrating customers to the Mews platform. Mews has done 5 such acquisitions so far. And while this process might cause churn of 30%, the addition of the remaining customers to the Mews system more than compensates with the additional revenue from transactions.
The other strategy is expanding technology and functionality. Because Mews sits at the center of a hotel’s network, services like television systems, accounting, and phones plug into the platform via more than 1,000 integrations. But the company is always looking for ways to expand that reach. For instance, Mews acquired Bizzon, which had built a restaurant point-of-sale platform, to capture the transactions when guests eat at the hotel restaurants.
“We’re looking for bigger and bigger targets,” Matthijs said. “We’ve become the core platform that integrates with everything.”
Deepki also has two guiding philosophies for M&A.
Some deals are intended to acquire a customer base, such as when the company bought UK-based Fabriq in 2022. The deal allowed Deepki to expand much more rapidly than through organic customer acquisition while also bringing on board a deeply experienced team that knew the UK market.
The other type of deal aims to broaden the company’s offer through additional, complementary technology. This was the motivation for buying Nooco in May 2023. Nooco’s SaaS platform calculates and optimizes the carbon footprint of building construction and renovation projects. Because Nooco could accurately assess the carbon impact of existing materials -- concrete, wood, glazing, and HVAC systems – Deepki could extend its services across the entire building life cycle.
“It was always in our roadmap to help our customers to make the right decisions when refurbishing a building,” Vincent said. “We knew we needed this technology and had actually started developing it internally. But when the opportunity to acquire Nooco presented itself, we acted quickly, and this got us there faster.”
ESG emphasis
When it comes to ESG, Deepki also walks the walk. Sustainability is Deepki’s core mission, so it is only natural for Vincent that the company needs to lead by example.
The Revaia 5th Anniversary soirée was held in Deepki’s Paris headquarters, a disused Volkswagen garage that has been transformed using cutting-edge sustainable construction methods to create an inspiring, low-carbon workplace that embodies Deepki’s values. Even the furniture is second-hand and restored using sustainable materials. And the company is putting a vegetable garden on the roof.
“We are very proud of this building because, symbolically, it’s an excellent example of what can be done in terms of low carbon,” Vincent said.
Deepki is B Corp certified, something it also advises customers to do. The company also hired an ESG manager to ensure that its sustainability principles are being applied across all branches as the company rapidly expands.
“This is also useful because we try things that we then want to push to our customers,” he said.
Matthijs acknowledged that for Mews, “ESG hasn't always come naturally to us.” Like many startups, Mews was focused in the early stages on growing as fast as possible.
But more recently, the company has been exploring ways to bring ESG into the core of business. For instance, in 2022 Mews expanded its integration with Hotel for Trees, a non-profit foundation that plants a tree every time a guest chooses to skip their daily housekeeping service.
Mews also partnered last year with hospitality school pioneers Saira Hospitality. The program recruits people who are struggling to find jobs and then trains them for the hospitality industry and eventually helps with job placement. The service is also beneficial to hotels that are facing labor shortages.
Finally, Mews has invested in an ESG manager to drive such partnerships as well as ensure such goals are being applied internally.
“It's really hard if you don't have a dedicated team to prioritize it,” Matthijs said. “And that's why we said we need a real person that will take the lead. I believe that if we don't live it, it will never become a culture. So we need someone to execute and lead on that.”
This ability to adapt has been a key source of strength for Mews and Deepki. By confronting challenges head-on and make major decisions, they have not only survived the difficult moments, but also emerged on the other side even stronger. All founders would do well to remember this: The right course corrections can be just as important as the product and technology for a successful scaling journey.