The Moscow-based food delivery startup Chefmarket.ru has just secured $3.5 million from Mitsui & Co — just one year after the Japanese corporation led a previous $1.5 million round.
“Mitsui has designated retail and services, including e-commerce and TV shopping, as one of its key domain, and is expanding its presence through various investments. After a small initial investment in Chefmarket in 2016, we are very pleased with the company’s progress and happy to support again the company for further growth plans,” stated Yuichiro Hanawa, General Manager of Media Business Division, IT & Communication Business Unit of Mitsui & Co.
“We will work to enhance the corporate value of Chefmarket with strong prospects for the meal-kit market globally and particularly in Russia,” he added.
Chefmarket offers home delivery of food products based on recipes from renowned Russian and Western European chefs. Along with groceries, Chefmarket customers receive step-by-step photo instructions. A subscription offer allows customers to select three or five meals to be delivered weekly.
Russian soup borscht, Thai soup Tom Yum and many other meals are featured in ChefMarket’s menu.
Chefmarket’s concept is close to that of Western startups Blue Apron and Hello Fresh – which raised hundreds of millions of US dollars over the past few years.
Meanwhile, Chefmarket claims to be able to manage offer variations even better than its Western peers. “We believe that customization is the key to success in this business and we can do this really well,” claims the startup’s CEO Sergey Ashin.
Ashin is an ex McKinsey consultant and alumni of the London Business School MBA program. He founded Chefmarket in 2012 in a bid to “revolutionize the notion of preparing food at home.”
More deliveries but lesser market share
The company currently covers three of the largest Russian cities: Moscow, Saint Petersburg and Nizhny Novgorod. It also used to serve Kazan, but left this city of nearly 1.2 million inhabitants since the local market was “not mature enough for such services,” Ashin says.
Chefmarket now claims to deliver over 100,000 meals in total every month, up from 60,000 one year ago. So far such levels have been reached with “almost zero marketing,” but Ashin tells us that the startup is about to shift to a more aggressive marketing approach.
Chefmarket estimates its current market share at approximately 40% — perhaps less than in the past, concedes Ashin, due to a dozen of new players having entered the market recently.
Among Chefmarket’s most established competitors are Domavkusnee.ru, Partiyaedi, and Elementaree.ru.
Hot meals, hot market
Currently valued at some 80 billion rubles (roughly $1.3 billion at the current exchange rate) annually, according to Delivery Club, the Russian food delivery market has attracted much investor attention recently.
The number one food delivery company in Russia, Delivery Club was acquired by Mail.Ru Group for $100 million in November 2015.
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 Foodfox.ru complete a $1 million funding round. The round was led by Target Global, an international fund with Russian backers which had previously invested in Blue Apron, Delivery Hero and Lemoncat.
Just weeks ago AddVenture, a Moscow-based fund which also invested in Chefmarket and Delivery Club at the early stage, invested $5 million in Grow Food.
