BiteClub - food tech start-up halts operations
Gurgaon based BiteClub, a platform to connect chefs and consumers, is temporarily halting operations. Founded in November 2014, BiteClub raised INR 3 crores of funding in March 2015 and then again in December 2015. Founder, Prateek Agarwal, explained that they were facing certain problems repeatedly while scaling the business; the temporary halt was meant to iron out the kinks and come back stronger.
Food-tech startups' funding explosion
Food tech start-ups in India have been relentlessly grabbing eyeballs; thanks to the number of deals and respective transaction size. The food services industry is expected to be worth $50 billion and grow annually at 15-20%. According to VCCEdge, there were 54 deals in 2015 itself equalling a total investment of nearly $236 million: almost stealing the spotlight from the e-commerce space.
Is the food-tech bubble really about to burst?
Relative ease in sourcing VC funding in the food tech space led to mushrooming of several nearly-identical start-ups. Investors in the food tech space suggest that instead of 'building scale', start-ups in this crowded space began to offer huge discounts in order to acquire customers. With a predominant focus on discounts, the cash-burn rate was unsustainable and eventually resulted in investors' interest dwindling.
Where is food-tech at?
Currently, the food-tech space is witnessing significant consolidation. VC investors are now keen to steer towards zero discounts and focus on experience to retain customers. Sriharsha Majety, CEO, Swiggy, believes that "this shakeout is good for the sector" as it will ensure food tech start-ups will now focus on unit economics and great service to acquire customers.
Some more data
According to Traxcn, there are 179 food related start-ups in India. A total of 60 such start-ups have received funding in 2015 and 2016.
Key food-tech players
Lay-offs in end 2015: Zomato laid off 300 employees; Food Panda and TinyOwl laid off 300 and 100 employees respectively. Consolidation: TinyOwl merged with RoadRunnr and re-branded as 'Runnr'. Raised funding: HolaChef raised additional funding from its existing VC investors. Fresh Menu raised $17 million in January early this year. Acquisition: Inner Chef founded by Rajesh Sawhney acquired Eatongo and Flavour Labs in March.
Chinese food tech start-ups competing for billions!
China's Meituan-Dianping that has a monopoly in the food tech space recently raised $3.3 billion. Not to be left behind, its competitor Ele.me went on to raise $1.25 billion!
