When people talk about “online food delivery” services, there’s a good chance they’re thinking of the Uber Eats, Instacarts, and Getirs of this world. But today, a startup that tackles a different side of the market – tackling the supply chain that then turns the wheels of the world’s largest food distribution machine – announces a big round of funding as ‘it continues to grow.
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 – raised $ 120 million in a Series E round of funding.
Funding comes from a wide variety of investors. Liberty Street Funds, Walleye Capital, Japan Post Capital, Joseph Stone Capital, Pegasus Tech Ventures, Tech Pioneers Fund are among the new funders, who are joined by existing investors Celtic House Asia Partners, INP Capital, Reimagined Ventures, Moringa Capital Management, and others, as well as other anonymous participants
Mike Xu, founder and CEO of GrubMarket (pictured above), tells me the business is currently very profitable. It is now at an annualized rate of $ 1 billion, with revenue growth of 300% over last year, with some markets like New York growing even more (it went from less than $ 10 million ARR to over $ 100 million).
With operations currently in Arizona, California, Connecticut, Georgia, Michigan, New York, New Jersey, Missouri, Massachusetts, Oregon, Pennsylvania, Texas and Washington, and some 40 warehouses nationwide. GrubMarket had a pre-currency valuation of over $ 1 billion, and now it will look to grow even more, both in terms of territory and in terms of technology, operating in a market largely absent from its competitors.
“We’re always the first in this space,” Xu said when I asked him in an interview about Rivals. “No one else does consolidation on the supply chain side like we do. We are trying to consolidate the American food supply chain through software technologies, while also trying to find the best solutions in this space. “
(And for some context, the $ 1 billion + valuation is more than double the valuation of GrubMarket in October 2020, when it raised $ 60 million to a post-currency valuation of $ 500 million.)
Longer term, the plan will be to consider an IPO to tentatively file the documents by summer 2022, Xu added.
GrubMarket got its start several years ago as one of many companies looking to provide more efficient farm-to-fork service. Taking advantage of the growing consumer interest in better, more traceable food, he saw an opportunity to create a platform to connect producers with the consumers, restaurants and grocery stores that were purchasing their products. (Grocery stores, incidentally, can be stand-alone operations, or something much bigger: One of GrubMarket’s biggest customers is Whole Foods, which uses GrubMarket for sourcing products in parts of the United States. It 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 big boost and high demand from the company’s consumers. , as more people turned to internet ordering and delivery services to make up for the fact that many stores were closed, or they just wanted to reduce the number of errands they did in person to slow the spread of Covid-19.
But fast forward to today, while the startup still serves consumers, it is currently not the main part of its business. Instead, it’s B2B2C, serving businesses which in turn serve consumers. Xu said that overall, consumer demand has decreased significantly compared to a year ago.
“We think restaurant reopens have meant more people are dining out again and spending less time at home,” Xu said, “and they can also go back to physical grocery stores, so they aren’t as well. interested in buying commodities online than before. I don’t want to offend other food tech companies, but I think a lot of them will see the same. I think B2C is going to really slow down in the future .
The opening of GrubMarket did not simply position itself as a middleman between producers and buyers, but to do so through technology and consolidate what was until now a very regionalized and fragmented market.
GrubMarket has won over 40 companies over the past three years. While some of them have helped it grow geographically (it has made 10 acquisitions in the Los Angeles area alone), many have also had to dub the technology.
These include Farmigo, once a competitor to Disrupt Battlefield which has become a software provider for CSAs (an area in which GrubMarket sees a lot of opportunity), as well as software to help farms manage their staff, their insurance and more: Pacific Farm Management is one example.
GrubMarket’s in-house software, WholesaleWare, a cloud-based service for farmers and other food producers, has seen sales increase by 3,500% over the past year, and it now manages more than $ 4 billion in sales. ‘wholesale and retail activities in the United States and Canada.
There will be obvious ways to expand what GrubHub does more deeply to meet the needs of its customers on the buying side, but it’s also in many ways a very crowded marketplace. (And not just crowded, but crowded with big companies. Even today, Toast, the company that develops software for restaurants, filed a $ 717 million IPO at a potentially valuation of 16. $ 5 billion.) Instead, GrubHub will continue to focus on what has a more neglected aspect, that of suppliers.
“I am focusing on the food supply chain,” Xu said. “Most of the time, operators in the food supply chain do not have access to e-commerce software and technology. But we’re not just a lightweight online ordering system. We put a lot of weight around inventory management, pricing and customer relationship, and even HR management for wholesalers and distributors. It will also mean, in the longer term, that GrubMarket will likely also start exploring connected hardware to help these customers as well: robotics for picking and moving items is the order of the day, Xu said.
“GrubMarket has built a profitable, high-growth business backed by its cutting-edge technology platform that is reinventing the way businesses access healthy, fresh food,” said Jack Litowitz, director of strategic investments at Reimagined Ventures, in a statement. “We are proud to support GrubMarket as it continues to expand into new regions and develop its WholesaleWare 2.0 software platform. At Reimagined Ventures, we are always looking to invest in companies that disrupt inefficient industries in innovative ways. Mike Xu and the team at GrubMarket created one of these companies. We are excited to support their vision and work to make the food supply chain more efficient.
“GrubMarket is transforming the trillion dollar food distribution industry at unprecedented speed by implementing advanced digital solutions and operational discipline. The scale, growth and profitability of the business are extraordinarily impressive. Pegasus is thrilled and honored to be a part of GrubMarket’s exciting journey ahead, ”added Bill Reichert, partner at Pegasus Tech Ventures.