When people talk about “online food delivery” services, chances are they think of the out-of-this-world Uber Eats, Instacart, and Getir. But today a startup that’s tackling a different aspect of the market — addressing the supply chain that later turns the wheels of the big food delivery machine — is announcing a major round of funding as it continues to grow. Is.
grubmarket, which provides software and services that help connect and manage relationships between food suppliers and their customers – which may include wholesalers and other distributors, markets and supermarkets, delivery startups, restaurants and consumers – The Series E round has raised $120 million. of funding.
Funding is coming from a broad mix of investors. Liberty Street Funds, Walleye Capital, Japan Post Capital, Joseph Stone Capital, Pegasus Tech Ventures, Tech Pioneers Fund are among the new supporters joined by existing investors Celtic House Asia Partners, INP Capital, Reimagined Ventures, Moringa Capital Management, He is going. and others, along with other anonymous participants
Mike Xu, founder and CEO of Grubmarket, tells me that the company is currently largely profitable. It’s now at a $1 billion annual run-rate, with revenue up 300% over last year, growing even more in some markets like New York (it’s from less than $10 million ARR to $100 million+). gone to).
With currently operations in Arizona, California, Connecticut, Georgia, Michigan, New York, New Jersey, Missouri, Massachusetts, Oregon, Pennsylvania, Texas and Washington and approximately 40 warehouses nationwide. GrubMarket had a pre-money valuation of over $1 billion, and will now seek to grow even higher in terms of space and technology, moving into a market that is largely absent from competitors.
“We’re still first movers in this space,” Xu said when I asked him in an interview about rivals. “Nobody else is doing consolidation on the supply chain side as we are. We are trying to strengthen the US food supply chain through software technologies, while also trying to find the best solutions in this area.”
(And for some context, the $1 billion+ valuation is more than double Grubmarket’s valuation in October 2020, when it raised $60 million at a $500 million post-money valuation.)
In the long run, the plan will be to tentatively file an IPO paperwork by the summer of 2022, Xu said.
GrubMarket started several years ago as one of many companies looking to provide more efficient farm-to-table service. Tapping into growing consumer interest in higher quality, more traceable food, it saw an opportunity to create a platform for producers to connect with consumers, restaurants and grocery stores who were buying their products. (Grocery stores, incidentally, may be independent operations, or something much larger: One of Grubmarket’s biggest customers is Whole Foods, which uses Grubmarket to supply produce to certain areas of the US. is currently the company’s largest customer.)
As we wrote last year, GrubMarket — like many other grocery delivery services — found that the pandemic initially provided a huge boost, and a huge rush of demand from that consumer side of the business, as more people turned to the Internet. -based ordering and to compensate for the fact that many stores were closed, or they simply wanted to reduce the amount of in-person purchases to slow the spread of COVID-19.
But fast-forward to today, while the startup still serves consumers, it’s not currently a primary part of its business. Instead, it is B2B2C, which are service providers who in turn serve the consumers. Xu says that overall consumer demand has dropped significantly compared to a year ago.
“We think the reopening of restaurants means more people are dining out again and spending less time at home,” Xu said, “and at the same time they can go back to physical grocery stores.” , so they’re not as interested as before. Buying raw materials online. I don’t want to offend other food tech companies, but I think a lot of them will be seeing the same. I think B2C is really the way forward Going to slow down.”
The opening for GrubMarket is not only establishing itself as a middleman between producers and buyers, but to do so through technology and to consolidate what has hitherto been a very regional and fragmented market. .
GrubMarket has acquired at least 40 companies over the past three years. While some of this is meant to help it expand geographically (it has made 10 acquisitions in the Los Angeles area alone), many are also built to double down on technology.
These include the likes of farmigo, once a disruptive battlefield contender that was driven to become a software provider for CSAs (an area that sees a lot of opportunity for Grubmarket), as well as allowing farms to manage their businesses staffing, insurance and more. Software to help you do this: Pacific Farm Management is one example. The latter
GrubMarket’s own in-house software, Wholesaleware, a cloud-based service for farmers and other food producers, saw its sales increase by 3,500% over the past year, and it is now generating $4 billion in wholesale and retail activity across the US. managing more than a billion. Canada.
On the buying end there will be obvious ways to expand what GrubHub does deeply into the needs of its customers, but it’s also a very crowded market in many ways. (And not just crowded, but crowded with big companies. Today, Toast, the company that makes software for restaurants, Filed for an IPO of $717 million Potentially at a valuation of $16.5 billion.) So instead, GrubHub will continue to focus on a more overlooked aspect of suppliers.
“I am focused on the food supply chain,” Xu said. “Operators in the food supply chain business do not have access to software and e-commerce technology most of the time. But we are not just a lightweight online ordering system. We do a lot of the heavy lifting around inventory management, pricing and customer relations, and even human resource management for wholesalers and distributors. It will also mean, long term, that Grubmarket will also begin to explore connected hardware to help those customers: Robotics to pick up and move objects is on that agenda, Xu said.
Jack Litowitz, Director of Strategic Investments at Reimagined Ventures, said in a statement, “Grubmarket has built a profitable, high-growth business by its best-in-class technology platform that transforms how businesses access healthy, fresh foods. ” “We are proud to support GrubMarket as it continues to expand into new areas and evolves its Wholesaleware 2.0 software platform. At Reimagined Ventures, we have always wanted to invest in businesses that help inefficient industries in innovative ways. Disrupting. Mike Xu and the Grubmarket team have built one of these businesses. We’re excited to support their vision and work to make the food supply chain more efficient.”
“Grubmarket is transforming the trillion-dollar food delivery industry at an unprecedented pace by implementing advanced digital solutions and operational discipline. The company’s scale, growth and profitability are exceptionally impressive. Pegasus is delighted and honored to be part of the exciting journey of Grubmarket,” said Bill Reichert, Partner, Pegasus Tech Ventures.