FreshMenu secures $17M in Series B funding led by Zodius

January 29, 2016
Binu Paul
Source: techcircle.in

FreshMenu’s existing investor Lightspeed Venture Partners also put money in this round, Signal Hill India, the investment banker to the transaction, said in a statement.FreshMenu, an online food-tech venture that delivers meals prepared at its kitchen facilities, has raised $17 million (around Rs 110 crore) in Series B funding led by Zodius Technology Fund.

It had raised $5 million in Series A round of funding last year from Lightspeed Venture Partners.

Food Vista India Pvt. Ltd, which runs FreshMenu, will use the funds to expand operations across the top six cities in India, and further its investments in brand building, tech and people.

Bangalore-based FreshMenu was founded in 2014 by IIM Ahmedabad alumni Rashmi Daga, who has previously worked with cab aggregator Ola and online jewellery store Bluestone.

FreshMenu is a full-stack food business wherein it controls the kitchens and delivery services. Started in Bangalore, the company has now expanded its services to Mumbai and Delhi-NCR. It offers a dynamic menu including mains, sides, salads and desserts. Other companies offering full-stack food services include Brekkie, Faaso’s and Box8.

FreshMenu’s successful fund raising round comes as a much-needed breather for the food-tech industry which has been on a downward spiral since the second half of 2015 as many companies struggled to raise funds, particularly mid- and late-stage investment.

This fresh food-tech investment comes on the heels of another player, Bundl Technologies Pvt Ltd, which runs online food ordering startup Swiggy, raising $35 million in Series C round of funding led by New York-based investor Harmony Partners and Singapore-based RB Investments.

However, several food-tech startups are still reeling under financial pressure to control costs and sustain investor interest; some have shut shop, tweaked their businesses, paused operations or reduced their staff count.

In December, Bangalore-based Eatlo Tech Solutions Pvt Ltd, which runs food delivery startup Eatlo, closed its operations five months after it raised angel funding from Powai Lake Ventures, Abhishek Goyal of Tracxn Labs and equity crowdfunding platform Globevestor. Also, mobile-only food ordering startup TapCibo Online Solutions Pvt Ltd, which operated under the brand Dazo, recently decided to shut shop as the Bangalore-based company completed a year of operations.

In September, food ordering marketplace Foodpanda was accused of irregularities in its operations involving fake orders.

The online food ordering business in India is estimated at Rs 5,000-6,000 crore, growing about 30 per cent month-on-month, according to a report by India Brand Equity Foundation. The sector includes aggregators, food-ordering platforms, delivery-only players, proprietary meal sellers and cloud kitchens

Foodpanda finds no buyer for even $10m. Without any buyers, Foodpanda may wind up

Jan 28, 2016
Digbijay Mishra
The Times of India (Bengaluru)

Rocket Internet-backed Foodpanda, facing rough weather, is desperately searching for a buyer at a lowly price tag o $10-15 million, multiple sources familiar with the development told TOI. The Samwer brothers-led internet company's interests in its Indian portfolio has rapidly been waning. Most of its flagship firms, including Fab Furnish and PrintVenue, are on the block. “Foodpanda has held talks with competitors in India. Owing to several issues the company is facing its peers have been pitched with a sale value of $10-15 million,“ a source told TOI.
A Rocket Internet spokesperson told TOI in an email, “We don't comment from Rocket's side to rumours about Foodpanda.“ Despite the low valuation, Foodpanda India has not found a buyer. It could be a signal that the foodordering platform may decide to shut operations soon.
In 2015, Foodpanda raised more than $300 million from Berlin-based Samwer brothers and Goldman Sachs for its global business. That's when it invested heavily into the Indian market, becoming one of the largest players in the online food-ordering segment. To ward off rivals Zomato, Swiggy and TinyOwl, Foodpanda acquired TastyKhana and Just Eat in India.But things started to slide from then. Reports emerged last year of an alleged fraud and systematic discrepancies in Foodpanda's operations.This was followed by the company laying off 300 in a crisishit food-delivery market.
“Zomato and Swiggy have been approached for a buyout.Rocket is yet to garner keen interest from possible suitors for Foodpanda,“ sources said. Zomato founder and CEO Deepinder Goyal did not respond to TOI calls; Swiggy cofounder Nandan Reddy refused to comment.
The so-called food-technology sector, which saw a rush of early-stage funds over the past year, is finding itself in the midst of a major restructuring, resulting in hundreds of job cuts. Zomato and TinyOwl together fired more than 500 people and have been scaling down operations. Gurgaon-based Zomato recently stopped taking online food orders in four Indian cities.
Foodpanda India, which is run by Pisces eServices, reported a loss of Rs 36 crore in March 2015 over a revenue of close to Rs 5 crore, as per data from RoC at the ministry of corporate affairs.

Zomato Set to Enjoy Spoils of Market War

Jan 25 2016
Aditi Shrivastava
The Economic Times (Mumbai).

Co on course to double its revenue in current fiscal & break even at operating level by mid-2016

Indian consumer internet companies tend to proudly wear losses on their sleeves as battle scars earned in capturing large markets. So there may be reason to cheer when online restaurant discovery firm Zomato says it will be operationally profitable by June.When that happens, Zomato will be the first among Indian ecommerce `Unicorns' -startups estimated to be worth at least $1billion -to reach the coveted milestone, ahead of larger companies like Flipkart and Ola.One that investors are urging their portfolio firms to rush to after seeing in the past year that market growth alone cannot be a self sustaining goal.

Zomato, which began operations eight years ago as a company listing restaurant menus, is on course to double its revenue in the current fiscal year ending March 31 and break even at the operating level by mid-2016, co-founder Pankaj Chaddah said in an interview to ET.

The company, which is val `6,700 ued at about $1 billion (. crore now), also expects to become India's largest online food ordering platform in two months, overtaking Rocket Internet-backed Foodpanda and SAIF Partners funded Swiggy, Chaddah said, emphasising the company's big thrust on the business it launched nine months ago in April.

Chaddah said he expects the business to grow by at least four times by the end of this calendar year to 50,000 orders a day, with an average order value of 550. Zoma to's core ads business, however, will remain its largest contributor, accounting for 80-85% of total revenue, he said.

For 2014-15, Zomato recorded an operating revenue of Rs. 96.7 crore and loss before interest, taxes, depreciation and amortisation of Rs. 136 crore. That compares with op` erating revenue of Rs.30.6 crore and Ebitda loss of Rs. 41.39 crore for 2013-14. Info Edge (India), the largest investor in Zomato with a 47% stake, is scheduled to announce its annual financial report next week.

“Our unit economics work,“ Chaddah said, referring to an operating metric keenly watched by investors. “We have very low customer acquisition costs (of Rs.7.50 per customer), so we don't need money for existing businesses.(About) 90% of the time our (food ordering) discounts are driven by the merchants,“ said Chaddha. Food-tech companies in India have struggled to sustain in recent months after burning large stacks of money raised from investors to win customers. TinyOwl, for example, had to shutter operations in some cities. Zomato, too, has been cutting costs and pulling back from cities where operations have not been viable.

Last year, it laid off 300 employees, many of whom had come on board via Zomato's $52-million acquisition of Urbanspoon in January 2015, its biggest overseas purchase.

This month, it shut food-ordering operations in Lucknow, Kochi, Indore and Coimbatore. Zomato will, instead, focus on food delivery in 10 large cities, including Ahmedabad and Pune, for the next one year, said Chaddha. “More than 9899% of the demand is from these cities,“ he said. Zomato began aggressively expanding overseas in 2014-15 by acquiring restaurant search firms in New Zealand, Poland, Czech Republic, Slovakia, Turkey and Italy.

Its purchase of Urbanspoon handed it a base to take on Yelp in the US as well as enter Australia and Canada. Zomato is now present in 22 countries and has about 2,600 employees globally.

In the past year, the company has turned its focus to breaking even.In September, Zomato raised Rs.390 crore in funding led by Singapore based Temasek and including existing investor Vy Capital.

Prior to that, it raised Rs.310 Crore from existing backers Info Edge and Sequoia Capital.

Zomato’s learning from 2015: Don’t scale too fast, always focus on revenue

Jan 26, 2016
Adith Charlie
Source: Techcircle.in .

Zomato’s quick expansion last year meant that the food tech venture had more rivals to worry about, resulting in a diminished focus on operational revenue.
“We scaled massively in 2015…We were rapidly launching operations in new geographies and setting up new businesses. Suddenly, having that many new competitors in new markets meant everything had to become an equal priority,” Zomato CEO Deepinder Goyal said in a recent blog posting.
“When you do that, you spread yourself thinner than you want to, and end up losing focus on what matters and what works,” he added in the blogpost which looked back at the mistakes Zomato made in 2015.

Expansion spree
Zomato Media Pvt Ltd’s expansion drive last year began with its acquisition of Urbanspoon. The $52 million deal was the restaurant discovery and food ordering venture’s biggest inorganic bet and allowed it to venture into the US market. In April, Zomato launched Zomato Order, its separate app for food ordering. This pitted Zomato against entrenched food ordering startups such as Foodpanda, TinyOwl, Swiggy and others.
“One of the outcomes of scaling rapidly was new competition, and we soon found ourselves at the center of a battle against everyone around us,” Goyal, who is also Zomato’s co-founder, said.
Heightened competition results in increased customer acquisition spend. Rapid growth always creates an extraordinary cost base. Even if startups have enough money in the bank, founders must make sure the operational revenue keeps flowing in steadily, said Goyal.
“Find ways to maximise your existing revenue channels, or find ways to create new ones. Also, cost saved is revenue earned, so cutting down burn by being prudent matters a lot,” he added.
Challenging period
The last four months have been challenging for Zomato. In October, Zomato said it was laying off around 300 employees worldwide, or nearly 10 per cent of its workforce. Most of the layoffs happened in its content teams across 22 countries. Zomato has also been facing difficulties in retaining top-level staff as a number of senior executives have left the company after short stints.
Again in October, Goyal sent an email to the company’s sales staffers, indicating that Zomato may fail to meet its sales target for the current financial year.
The company tried to attract more eyeballs by advertising on porn sites. However, the move drew a barrage of criticism from social media channels, compelling Zomato to withdraw the campaign. Early this month, Zomato shut down its food ordering business in four cities.
Goyal said that startups can only improve what they can measure.“This is especially relevant if you’re in the transactions business – you can either keep throwing money or people at a problem you’re not sure you’re actually solving, or you can keep testing, tweaking, and measuring to see what works and what doesn’t,” he said.
It means iterating and executing quickly, until one finds the recipe for the secret sauce, Goyal added.

External funding
Zomato has so far raised $225 million in external funding from prominent investors such as Info Edge, Sequoia India, Vy Capital and Temasek. A large portion of the money raised was spent in acquiring companies so that it could build a global business. Zomato is believed to be valued around $1 billion following the fourth round of capital infusion last year.

Menu Planners - What's on menu decides food biz fate

Jan 27 2016
Ipsita Basu
The Economic Times (Bangalore)

What's on Menu Decides Food Biz Fate

SELLING POINT Menu planners become an integral part of city's restaurant scene
No matter what you fancy on your plate, there's either a restaurant or an app that promises to satiate your craving. But what most do not know is the effort menu planners put in to bring you those fingerlicking, ever-transforming dishes.Aditya Rao, who runs Nuts Over Salads, which delivers healthy , gourmet salads, says hiring a menu planner helped him refocus on the business. “Being a chef myself, I worked and planned the menu initially . But our menus change every week and having a planner saves me a lot of time for building the business,“ he says.
Menu planners are gaining in importance in Bengaluru because unlike Rao, who comes from a family of restaurateurs, a lot of non-culinary but food-loving enthusiasts in the city are increasingly jumping into the food business.

Monika Manchanda, food consultant and culinary trainer, did her first commercial menu planning assignment two years ago for a client who wanted to start a café but didn't understand the intricacies of food.
“Unless the person running the establishment is a chef or someone with a deep knowledge of food, it is tough to keep abreast with current food trends. While menu planning sounds like a simple process, it entails a much deeper understanding of the business,“ says Manchanda, a former technology industry employee whose food blog led her to start a food consultancy called Sin-A-Mon.
Menu planning is principally about making “blueprints not just for profitability but also for USP ,“ says recipe developer Ambica Selvam.
“When effectively done, a good menu is what makes a food business popular, besides giving it focus and creating a benchmark to evaluate against different factors from customer experience to return on investments,“ she says.
A menu planner with 3-5 years of experience can make `20,000 to `50,000 a project depending on its complexity , depth of menu and the size of the business. With a few more years, they can be making `70,000 to `1.2 lakh a project.
“A good menu planner,“ says Rao of Nuts Over Salads, “is someone who shares the passion and ideas that a business needs. It's also important for the person to know extensively about ingredients, calorie counts and textures.“
Manchanda lists target audience, food costs, kitchen processes and seasonality of dishes among important factors to keep in mind. “Continuity of supplies is another thing to keep in mind,“ she says.
Selvam adds food trials and staff training and orientation to that list.