Incapto, the coffee brand that skips capsules

Not all businesses born during the pandemic manage to thrive as Incapto is doing. The Barcelona-based company of non-encapsulated coffee by subscription already has 3,000 active customers and expects to close the year with 7,000 users and a turnover of 3.5 million euros. Although it is a 100% native digital company focused on online sales, to boost brand awareness, Incapto plans to open four temporary stores in Barcelona and Madrid in the coming months. It is also working on its internationalization plan and expects to move the production of its coffee makers from China to Spain next year. To finance all this expansion, at the beginning of 2022, the company will open a new round of financing to raise about three million euros. Incapto has already created 25 jobs and expects to end 2021 with a staff of 40 people.

But, let's go by parts. What is Incapto, how did it arise, and what opportunity has it seen in the market? There are multiple tailwinds that have allowed the development of this startup, born with the aim of bringing the best specialty coffee to homes and combating the growth of the coffee capsule business, which they consider unsustainable as it generates a type of waste that is very difficult to recycle. "We want to make coffee consumption sustainable, with an innovative business model that is good for the customer experience ---you drink freshly ground coffee---, it's good for your pocket ---you save 20 cents per coffee compared to the cost of a capsule---; and it's good for the planet, as we eliminate the environmental impact of single-dose pods," explains the CEO and co-founder of Incapto, Francesc Font, in an interview with The New Barcelona Post.

Font is a serial entrepreneur, as he is an old acquaintance of Barcelona's technological ecosystem. He was a founding partner of Nubelo, a marketplace for intermediating services between companies and freelance professionals that was sold in 2016 to the Australian group Freelancer. He has also been part of other startups such as Bandit and Carethy and is a professor at Esade, mentor, and partner of multiple entrepreneurial projects.

A week before the pandemic, Font created Incapto along with two partners: Joaquim Mach —former Bilua and former marketing director at Exoticca— and Beatriz Mesas, a coffee expert eager to start a business and be part of the so-called third wave of coffee, an international phenomenon that advocates for the revaluation of this product, focusing on specialty coffee and quality. The idea is to stop treating coffee as an industrialized commodity and shift towards a more artisanal model based on origin purchase and organic production, a trend that follows similar phenomena experienced in other sectors, such as wine, beer, or bread, to name a few examples.

Incapto wants to be a prominent player in this third wave and also benefits from the rapid digitalization and servitization of the economy, the rise of e-commerce, and a growing social awareness regarding the need to reduce waste to address the climate emergency. In fact, Incapto means "uncapsulated" in Latin, a declaration of intent to captivate a consumer who is no longer comfortable generating a pile of capsules they don't quite know how to recycle, but who also doesn't want to give up the convenience of pressing a button and getting a perfect espresso.

It is estimated that today capsule coffee brands already account for 50% of the coffee consumed in Spain, but according to Font, "95% are not recycled." In his opinion, compostable single-dose pods "are not a valid alternative either," which is why Incapto has opted to return to whole bean coffee by marketing an automatic coffee machine with an integrated grinder designed to satisfy the convenience sought by capsule consumers and which only has two buttons: long coffee and short coffee.

"We have created a native digital brand, which addresses the consumer directly and represents a disruption in the world of coffee by opting for a subscription model and a machine that guarantees a user experience equal to or better than a capsule coffee machine, since the whole house smells of freshly ground coffee," explains Font.

Incapto currently sells a single coffee machine model at a price of 269 euros, with the obligation to sign a one-year subscription to receive the brand's coffee at home every three months. The minimum order is 1.5 kilos, but the average subscription is for a consumption of three kilos per quarter, equivalent to a family unit that consumes about four coffees a day.

One kilo of Incapto coffee allows for about 120 espressos and costs about 20 euros, which means that each coffee has a cost for the user of between 16 and 17 cents, compared to the cost of between 35 cents and 40 cents for L'Or and Nespresso, the most well-known capsule brands on the market. Incapto assures that the average basket of its subscribers is 52 euros per quarter.

The brand's customers can choose from twelve varieties of Arabica coffee of different origins, 100% organic. The Barcelona-based company buys green coffee directly from producers and roasts and packages it in a plant located in Alcover (Tarragona), from where shipments are also made.

The firm began operating in June 2020 and closed that first fiscal year with revenues of 400,000 euros. It now has a portfolio of 3,000 users and the forecast is to end 2021 with 7,000 clients and sales of 3.5 million euros. The business plan establishes invoicing 9 million next year, reaching 15 million by the end of 2023, and doubling sales in the fourth year, when 30 million is projected to be invoiced.

Incapto started with an initial investment of 400,000 euros resulting from contributions made by the three founding partners and a couple of business angels. A year ago, and in just seven hours, the company raised an additional 500,000 euros from one hundred small investors who participated in a first round of financing carried out through the investment platform Dozen, formerly The Crowd Angel. Subsequently, Banco Sabadell, through the BStartup program, also invested 100,000 euros in the firm, which has therefore raised one million euros so far. To this figure must be added a loan of one million euros granted by Sabadell Venture Capital through its venture debt vehicle. Of this amount, 400,000 euros have been allocated to the purchase of coffee machine stock.

New connected machine model

According to Francesc Font, to finance the company's growth and also address internationalization ---they want to start with Southern European countries--- a new financing round of about three million euros will be launched in early 2022. This figure will also allow Incapto to develop and commercialize a new model of intelligent machine that will be connected to the Internet and that the company wants to manufacture in Spain and not in China. "We will launch a connected machine that will provide us with greater technological integration and will be locally manufactured; we want to bring production closer because sustainability is part of our DNA," explains the founding partner.

Despite being an online brand, with the aim of boosting its notoriety, Incapto is also preparing for the coming months of October and November the opening of four pop-up or temporary stores to take advantage of the Christmas campaign. The establishments will be located in shopping centers in Barcelona and Madrid and will allow customers to taste their coffees and learn about their subscription business model.

In parallel, the startup is also experiencing strong growth through a more recently created division: the sale of coffee machines for businesses. It already has 400 clients and has created its own commercial network in Barcelona, Madrid, Valencia, and Northern Spain. "There is a very big opportunity in the office market, as capsules are expensive and generate a waste problem for them," says Font. According to the entrepreneur, each coffee maker they install in an office is equipped with a chip that permanently sends information to the cloud and allows the company to send more coffee before it runs out, bill for consumption, and schedule maintenance visits.