Choco Raises $30.2M in Funding

Choco, a Berlin, Germany-based company focused on simplifying how restaurants order from suppliers, raised $30.2m in funding.

The round was led by Coatue Management with participation from previous investors Bessemer Venture Partners, Atlantic Labs, Target Global and Greyhound. In conjunction with the funding, Coatue Chairman Dan Rose, a 20-year industry veteran and former senior leader at Facebook, will join Choco’s board of directors, along with Coatue Partner Bennett Siegel.

The company, which has raised a total of $71.5m since 2018, intends to use the funds to expand into new markets and scale its team to 200 employees by the end of the year.

Founded by serial tech entrepreneurs Daniel Khachab, Julian Hammer and Rogerio da Silva Yokomizo, Choco is launching a direct-to-consumer program to link increased consumer demand for groceries delivered to homes, with the excess supply of restaurant-quality, locally-sourced produce from wholesale food suppliers. The company will provide next-day delivery to buyers, with increased sustainability measures as products are sold fresh, locally and with less packaging.

Choco is rolling out this program in all 17 of its global markets (in eight countries that include Germany, France, Spain, the Netherlands, Austria, Belgium, Brazil and the United States), with dedicated direct-to-consumer e-commerce websites set up for suppliers and consumers in each market. The company combines mobile e-commerce tools with a chat app platform to enable restaurant managers and food suppliers to digitally migrate their supply chain operations.

Additionally, as part of this initiative Choco will donate 100% of profits, until restaurants reopen, to regional funds to help local restaurants stay afloat.

Source, FinSMEs, April 17, 2020

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Kitchen United Raises $40M for Its Ghost Kitchen Network, Expands East

Kitchen United, which operates a growing network of shared kitchen spaces for restaurants around the U.S., announced today it has closed a Series B round for $40 million. The round was co-led by RXR Realty and GV (formerly Google Ventures), with participation by funds managed by Fidelity Investments Canada ULC, DivcoWest and G Squared. Existing investors and founders John Miller, Harry Tsao, and others participated, too. This brings KU’s total funding raised to $50 million.

The popularity of ghost kitchens — also known as “virtual kitchens,” “kitchen as a service,” and a slew of other monikers — has skyrocketed in recent months as restaurants large and small try to meet the demands of this delivery-crazed era we live in.

Kitchen United, which launched in 2017 in Pasadena, CA, has been at the forefront of this movement with its growing network of facilities that can house between 10 and 20 ghost kitchens per location and are home to brands like The Halal Guys, Wetzel’s Pretzels, Canter’s Deli, and others.

In October 2028, Kitchen United got a $10 million investment from Google’s parent company and CaliBurger CEO John Miller.

With the new investment, KU will be moving into more locations — the NYC market in particular. According to a press release sent to The Spoon, part of the deal with RXR Realty involves opening ghost kitchen facilities on RXR properties in the city as well as the tristate area. Such a partnership is wise on KU’s part as the company looks to expand into cities known for astronomical rents when it comes to large spaces. KU will expand to several RXR properties, starting with Brooklyn, Manhattan, and Stamford, CT.

The company currently operates a facility in Chicago as well as its original one in Pasadena. As the press release noted, locations for Scottsdale, AZ and Austin, TX will open soon. And the company is also looking to expand to other major metropolises like San Francisco, Boston, and Los Angeles — also cities where a deal with a real estate company might not be a bad idea.

In New York, at least, Kitchen United will compete with the newly opened Zuul Kitchens, who just opened their first location in Manhattan’s SoHo neighborhood and is focusing on that market for further expansion.

Source. The Spoon, September 19, 2019

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Just Eat and Takeaway.com merger designed to ward off younger rivals such as Uber Eats

When Alex Canter, a University of Wisconsin-Madison graduate and the fourth-generation proprietor of Canter’s Deli in Los Angeles, took over business development operations at his great-grandfather’s restaurant, he quickly became frustrated by the complexity involved in routing orders from multiple food delivery platforms. Fortunately, he met entrepreneur Mike Jacobs, who’d launched a product targeting order fulfillment for stadium concession stands and food trucks. The two cofounders, along with four others, fine-tuned a solution with partners that included Kitchen United and Epson, and in under a year their product and company — Ordermark — graduated from Boulder, Colorado-based accelerator Techstars and grew to more than 25 employees.

Now, months after moving its headquarters to a 7,200-square-foot office in Culver City (while keeping a Denver office), Ordermark is gearing up for growth with a fresh capital infusion. The startup today revealed that it recently closed an $18 million series B funding round led by Foundry Group, with participation from previous investors TenOneTen Ventures, Vertical Venture Partners, Mucker Capital, Act One Ventures, and Nosara Capital. The raise comes after a $9.5 million series A in September 2018 and brings Ordermark’s total raised to over $30 million.

CEO Canter says the funding will fuel the integration of Ordermark’s service with existing restaurant technologies, including point of sale (POS) systems, kitchen display systems, accounting tools, last-mile delivery companies, and more. Additionally, he expects it will lay the groundwork for support of emerging restaurant models, like virtual restaurants.

“I cofounded Ordermark to help my family’s restaurant adapt and thrive in the mobile delivery era and then realized that, as a company, we could help other restaurants experiencing the same challenges. We’ve been gratified to see positive results come in from our restaurant customers nationwide,” said Canter. “So we are thrilled to have the backing of Foundry Group to fuel our growth. We have some incredibly cool innovations in the pipeline and look forward to bringing them to restaurants everywhere.”

For each client, Ordermark develops a strategy and creates a bespoke rollout plan, identifying services to bring on, negotiating rates, setting up marketing strategies, and even designating delivery driver pickup zones. The company supplies ordering hardware in the form of a touchscreen Samsung tablet and custom-designed Epson printer, along with software that integrates well over a dozen delivery providers, including Uber Eats, Postmates, DoorDash, ChowNow, Caviar, Delivery.com, and popular POS systems like Brink, Dinerware, Positouch, Simphony, and Squirrel.

Hardware is an important piece of Ordermark’s approach, according to Canter. Prior to onboarding, its restaurant customers are often stuck juggling multiple tablets and laptops to field incoming delivery orders. A multitude of printers and disparate checkout workflows exacerbates the problem, particularly at peak times.

The other key to Ordermark’s solution is a dashboard from which restaurant employees can manage multiple platforms (even for restaurants that provide their own delivery drivers) and from which they can reach out directly to a U.S.-based customer care team to change hours, update menus, or even temporarily pause service. This dashboard also affords them access to analytics tools that surface real-time locations and metrics and run reports across all delivery services.

Ordermark’s success has been nothing short of meteoric, with over 3,000 restaurant brands signed on to date including Buffalo Wild Wings, Little Caesars, Sonic, Qdoba, Johnny Rockets, Subway, Popeyes, Papa John’s, Which Which, Moe’s, Togo’s, Pinkberry, Pieology, TGI Fridays, Yogurtland, and Halal Guys. Deployments rose from 20 U.S. states in September 2018 to over 40 today, and Ordermark expects to have customers in all 50 states within months.

Ordermark competes to an extent with Chowly, which similarly integrates third-party ordering platforms with POS systems, and Checkmate, whose tech suite funnels orders directly into restaurants’ POS systems. But Foundry Group partner Chris Moody believes the food delivery market’s current trajectory — from $17 billion in revenue this year to more than $24 billion in 2023, according to Statista — promises great things for Ordermark.

“Foundry Group has a long history of investing in companies that glue together disparate systems over diverse platforms — and that’s exactly what Ordermark is doing in the restaurant industry: connecting third-party ordering solutions, point-of-sale systems, and other cool innovations to help restaurants consolidate, grow, and understand their delivery business,” said Moody. “We were initially introduced to Ordermark via three of our partner funds: Techstars Ventures, Matchstick Ventures, and TenOneTen Ventures. All three were incredibly excited about what the Ordermark team is building and the tremendous progress they’ve made since their series A investment. The more we got to know Alex and the team, the more we realized what an incredible platform they’re building. Their products work in part because Alex is a fourth-generation restaurant owner and he and his team truly understand the needs of the restaurant."

Source. Venture Beat, Paul Sawers, July 29, 2019

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DoorDash picks up $600M Series G as valuation soars

By Ian Agar

DoorDash, the on-demand food delivery service, cannot stop delivering funding rounds, either.

The company has officially gone parabolic with a $600 million Series G on a stunning $12.6 billion valuation, a nearly 78% surge from its $7.1 billion valuation in February. Newcomer investors Darsana Capital Partners and Sands Capital joined existing investors Coatue Management, Dragoneer, DST Global, Sequoia Capital, Softbank Vision Fund, and Temasek.

DoorDash said Thursday that in 1Q, it saw an astronomical 280% YoY increase in annualized gross merchandise value to $7.5 billion. It's unclear if this figure is compared with 2017's results or if that is a forecast for the rest of 2019. The company did not immediately respond to a request for clarification.

The delivery service also reported operations in over 4,000 cities in the US and Canada, with a goal of growing to 100 Canadian cities by the end of the year, up from around 50 currently. 

Perhaps most pivotal in this regard was the company's Series D in March 2018, which saw SoftBank's Vision Fund leading a massive $535 million round. This funding injection reportedly allowed DoorDash to grow from its comparatively tiny 600-city footprint to the enormous list it now oversees.

While DoorDash was happy to expand so quickly thanks to the windfall, SoftBank is also happy to diversify its food delivery bets. The Tokyo-based firm is Uber's largest shareholder, and in turn, has helped fund DoorDash's competitor, Uber Eats.

Profitability question

The topic of profitability is not mentioned in DoorDash's blog post, continuing a wider investment trend of turning a blind eye to blood-red profit/loss statements in favor of pursuing industry disruption.

In hindsight, such priorities were apparent in DoorDash's massive Series D round last year. In allocating the funds, geographical growth was favored over working toward a consistently profitable operation, allowing the company to uproot local, in-house delivery services at restaurants.

The company has also sought to achieve a presence through corporate partnerships and white-label services. For example, on May 2, Wyndham Hotels and Resorts announced a partnership to offer free DoorDash delivery services to guests staying in over 3,700 of the hotel company's locations. Such a partnership complements DoorDash's existing white-label services provided to dining chains such as Denny's and Wingstop.

If DoorDash can continue striking high-profile corporate partnerships while replacing traditional in-house delivery employees at restaurants, a profitable business model could be worked out later to take advantage of an enormous established network.

Source. Pitchbook, Ian Agar, May 23, 2019

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Amazon leads $575M investment in Deliveroo

By Jon Russell

Amazon is taking a slice of Europe’s food delivery market after the U.S. e-commerce giant led a $575 million investment in Deliveroo .

First reported by Sky yesterday, the Series G round was confirmed in an early U.K. morning announcement from Deliveroo, which said that existing backers, including T. Rowe Price, Fidelity Management and Research Company and Greenoaks also took part. The deal takes Deliveroo to just over $1.5 billion raised to date. The company was valued at more than $2 billion following its previous raise in late 2017, although no updated valuation was provided today.

London-based Deliveroo operates in 14 countries, including the U.K., France, Germany and Spain, and — outside of Europe — Singapore, Taiwan, Australia and the UAE. Across those markets, it claims it works with 80,000 restaurants with a fleet of 60,000 delivery people and 2,500 permanent employees.

It isn’t immediately clear how Amazon plans to use its new strategic relationship with Deliveroo — it could, for example, integrate it with Prime membership — but this isn’t the firm’s first dalliance with food delivery. The U.S. firm closed its Amazon Restaurants U.K. takeout business last year after it struggled to compete with Deliveroo and Uber Eats. The service remains operational in the U.S.

“Amazon has been an inspiration to me personally and to the company, and we look forward to working with such a customer-obsessed organization,” said Deliveroo CEO and founder Will Shu in a statement.

Shu said the new money will go toward initiatives that include growing Deliveroo’s London-based engineering team, expanding its reach and focusing on new products, including cloud kitchens that can cook up delivery meals faster and more cost-efficiently.

Source. TechCrunch, Jon Russell, May 17, 2019

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Halla Raises $1.4M in Seed Funding

Halla, a Los Angeles, CA-based AI company focused on personalized recommendations for the food ordering industry, raised $1.4m in seed funding.

The round, which brings the total equity raised to $1.9M, was led by E&A Venture Capital with participation from multi-stage technology investor SOSV.

The company intends to use the funds to:
– scale the I/O platform,
– onboard new customers, and
– further develop its AI technology.

Co-Founded by Spencer Price (CEO), Henry Michaelson (CTO) and Gabriel Nipote (COO), Halla is an AI company focused on personalization for the food ordering industry. Using Machine Learning technologies built around the psychography of food selection and billions of food-related data points, the company’s core offering Halla I/O (Intelligent Ordering) allows online grocers, meal kit services and food delivery businesses to offer personalized food ordering suggestions to their customers.

The platform is currently being used in stealth mode by several regional and national grocery chains.

Source. FinSMEs, Staff, May 15, 2019

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DoorDash raises $400M round, now valued at $7.1B

By Anthony Ha

Delivery company DoorDash is announcing that it has raised $400 million in Series F financing.

Earlier this month, The Wall Street Journal reported that the company was looking to raise $500 million at a valuation of $6 billion or more. In fact, DoorDash now says the funding came at a $7.1 billion valuation.

The round was led by Temasek and Dragoneer Investment Group, with participation from previous investors SoftBank Vision Fund, DST Global, Coatue Management, GIC, Sequoia Capital and Y Combinator.

DoorDash  has been raising money at an impressive rate, with a $535 million round last March followed by a $250 million round (valuing the company at $4 billion) in August.

Co-founder and CEO Tony Xu  told me the round is “a reflection of superior performance over the past year.” Apparently, the company is currently seeing 325 percent growth, year-over-year, and it points to recent data from Second Measure showing that the service has overtaken Uber Eats in U.S. market share for online food delivery — DoorDash now comes in second to Grubhub.

“I think the numbers speak for themselves,” Xu said. “If you just run the math on DoorDash’s course and speed, we’re on track to be number one.”

He attributed the company’s growth to three factors: its geographic reach (3,300 cities in the United States and Canada), its selection of partners (not just restaurants — Walmart is using DoorDash for grocery deliveries) and DoorDash Drive, which allows businesses to use the DoorDash network to make their own deliveries.

He added that DoorDash has been “growing in a disciplined way, turning markets towards profitability.”

The funding, Xu said, will allow the company to continue investing in Drive, in its DashPass subscription service (where you pay $9.99 per month for free deliveries on orders of $15 or more from select restaurants) and in more hiring. And while DoorDash is currently available in all 50 states, Xu said there’s still plenty of room to cover additional territory in the U.S. and especially Canada.

“To me, this round … really changes the position of the company, not only as we march towards market leadership, but as we go beyond restaurants and become the last mile for commerce,” he said.

Not all of DoorDash’s recent news has been good. Along with Instacart, the company has been under scrutiny for subsidizing its driver payments with customer tips.

When asked about the criticism, Xu said the current compensation system was tested “not in a quarter, not in a month, but tested for months” before being implemented in 2017, and since then, there’s been a “significant increase” in retention among “dashers,” along with improved dasher satisfaction and on-time deliveries.

“When it comes to this pay model that has been in the press, the most important thing, I would say, is looking again at the facts and results,” he said.

Source. Techcrunch, Anthony Ha, February 21, 2019