To leverage this increased investor attention and the buzz around cloud kitchens, eight-year-old food maker and delivery app Faasos is in the funding ground looking to attract new investors for a $75 Mn-$100 Mn round.
An ET report citing sources said that the company is looking to raise the fresh funding round from investors such as Multiples Alternative Asset Management, Temasek, Goldman Sachs, Falcon Edge and Canadian Pension Plan Investment Board.
It also said that the existing investors Sequoia Capital and Lightbox Venture are also expected to pump around $20 Mn in the new financing round. The company as it is reportedly seeking a $400 Mn valuation.
However, Inc42 found through the company’s filings that the talks are at very initial stages. This also revealed that the company was last valued at $198.7 Mn (INR 1416.33 Cr) on September 30, 2018.
Faasos: Nine In-house Brands And More
Founded by Jaydeep Barman and Kallol Banerjee, Faasos is a multi-brand cloud kitchen which sells its products via food delivery companies like Swiggy and Zomato as well as independently through its app.
In January, the company raised $4.2 Mn from Alteria Capital in a secured, redeemable non-convertible debt to enter overseas markets and expand both its product range and cloud kitchen presence nationally.
It counts backers such as Sistema Asia Fund, Lightbox Ventures II, Lightbox Expansion Fund, Sequoia Capital India, RuNet South Asia, and RB Investments, Evolvence India among others.
Faasos has nine in-house brands such as Oven Story, Firangi Bake and Mandarin Oak. The company currently has 175 cloud kitchens across 12 cities in India and receives almost 30K daily orders.
In FY18, the company delivered same kitchen sales growth of 75% compared to the industry average of 10% to 15% same-store sales growth.
Cloud Kitchens: The Next Disruptor Of Foodtech?
The company is exploring international growth at the time when industry is coming to terms with the market potential of cloud kitchens.
The cloud kitchens don’t require much upfront costs when compared to a classic dine-in and takeaway restaurant and budding restaurateurs can use this as an opportunity to test out their brand and customer base before opening a premise in a low-risk environment.
This has been now followed by industry giants as well. Just recently, Ola’s Foodpanda cut marketing and customer acquisition costs by two-thirds, to focus on its own private labels and cloud kitchens which include The Great Khichdi Experiment, Lovemade and FLRT brands, and continue to leverage Ola’s base.
Beyond this, Swiggy launched its cloud kitchen service Access while Zomato’s cloud kitchens have also continued to attract customers. A new entrant in the business came when reports surfaced that hospitality chain OYO may pick up a stake in FreshMenu followed by its own food experiment with cloud kitchens.
As Faasos looks for fresh funds, the market is ripe for its full efforts to maintain its stake in the food industry of India.