In a new illustration of VC interest in the Russian food delivery market, Grow Food has attracted $5 million from AddVenture, a Moscow-based fund, the Russian business daily Kommersant reported last week.
Currently, the startup offers food deliveries to athletes on a subscription basis. Customers may pick one of two weekly eating programs. The tariffs vary from 3,500 rubles (roughly $58 at the current exchange rate) to 5,900 rubles (nearly $100) depending on the number of meals per day and the number of days per week.
The startup claims to deliver around 700,000 orders monthly. Currently covering Moscow and Saint Petersburg, it plans to expand to Krasnodar, Kazan, and Yekaterinburg and further on to a hundred Russian cities.
Grow Food’s monthly turnover amounts to nearly $1.2 million, claims Grow Food’s co-founder Daniel Galper.
From fundraising to break even
“We broke even in January this year following a previous round of funding [30 million rubles, roughly $450,000 brought by AddVenture] last summer. Currently, we are profitable and expect to reach the next break-even point in December, taking into account the new round of investment which will be used to develop and scale up the business,” Kommersant quotes Galper as saying.
Grow Food is one of the fastest-growing companies in the fund’s portfolio, said AddVenture’s founder and managing partner Max Medvedev.
The company may account for as much as 10% of the ready-to-eat food delivery market by 2020, he expects.
The latest funding will be used to launch new offers and for marketing purposes, said Galper. The startup also aims to automate manufacturing and launch a nationwide distribution center, which will allow Grow Food to offer more individualized eating programs.
Corporate appetite
The Russian food delivery market is currently valued at 80 billion rubles (roughly $1.3 billion at the current exchange rate) annually and is growing by 15% per year, according to Delivery Club.
The number one food delivery company in Russia, Delivery Club was acquired by Mail.Ru Group for $100 million this past November.
One month later, the LSE-listed group also invested in Instamart, a Moscow-based startup which organizes food deliveries from offline retail outlets; then it acquired the food delivery startup ZakaZaka.
Last year also saw Mitsui invest in ChefMarket.ru — with existing investors AddVenture and QIWI co-founder Andrey Romanenko also participating in the deal — and Foodfox.ru complete a $1 million funding round.
The Foodfox round was led by Target Global, an international fund with Russian backers which had previously invested in Blue Apron, Delivery Hero and Lemoncat.
