InnerChef India Pvt Ltd, the parent company of cloud kitchen platform Innerchef, has raised $6.5 Mn (INR 43 Cr) in a Pre-Series B round led by Mistletoe Inc. and Das Capital. The company said it will use the funds to double headcount and build more shared kitchens in 2019 while also introducing subscription-based food delivery models across India.
Existing investors who participated in the round include Mohandas Pai’s Saha Fund, Times Group’s investment arm, Brand Capital and M&S Partners.
“The fresh funding will be used to strengthen the brand portfolio. Healthie, for instance, has become a category-defining brand in 2018. We are also using the fresh round of funding to further strengthen our shared kitchen platform across India,” said Rajesh Sawhney, cofounder and chief executive officer, InnerChef.
Founded in 2015 by Sawhney, Sanjeev Singhal and Bal Dighent, the Gurugram-headquartered company started as a raw ingredient box that a consumer could make a dish out of. However the founders later realised that “India is not ready for the box model” and the company pivoted to delivering food from cloud kitchens.
Currently, it has about 25 kitchens that operate as a hub-and-spoke model across six cities. The company has built a portfolio of brands like Healthie, Bombay Sandwich Company, Thalis of India, YumYumDilli and YumYumSouth. Currently Healthie contributes to a third of its orders.
Unlike foodtech companies like Swiggy and Zomato which primarily focus on food delivery, a cloud kitchen-centric companies such as Innerchef and Freshmenu also manage food preparation and packaging without a dine-in facility for end-users.
Innerchef’s Expansion Plans
In a conversation with Inc42, Sawhney said that Innerchef’s expansion plan for 2019 includes expanding its footprint in 10 additional cities including Pune, Ahmedabad, Kolkata, Chennai and Jaipur. The company is also aiming to take the number of cloud kitchens to 100 this year. In five years the company is looking to build and run 1,000 kitchens, Sawhney said.
The company said it plans double its employee headcount in the year from its current 500 employees. Innerchef will also look into starting a subscription model for prepared food on its platform.
In fiscal year 2018, the company raised a total of $2.52 Mn (INR 17.16 Cr) Of this, $567.01K (INR 3.96 Cr) was raised via the issue of Series A preference shares in August 2017, and $1.89 Mn (INR 13.2 Cr) via Series B preference shares issued in December 2017 according to a media report.
InnerChef has raised a total of over $10 Mn (INR 70.09 Cr) in funding so far. Its lead investor is Mistletoe, a Japanese investment firm run by Taizo Son, the younger brother of SoftBank Group founder Masayoshi Son. Taizo Son’s recent investments include agritech startups Ninjacart and Kisan Network.
Innerchef’s Growth Slows In FY18
After recording nearly 3X growth in 2017, the company’s revenue growth slowed down in 2018.
The company’s revenue for FY18 was $2.24 Mn (INR 15.67 Cr), a 58.7% increase from $1.41 Mn (INR 9.87 Cr) in FY17. The losses of the company have increased by 17.12%, going up from $1.58 Mn (INR 11.01 Cr) to $1.84 Mn (INR 12.89 Cr)
The expenses for the foodtech firm went up by 24.81 percent, from $3.67 Mn (INR 25.7 Cr) in FY17 to Rs $4.58 Mn (INR 32.08 Cr) in FY18. The company’s biggest expense was manpower service charge.
As more people opt for staying in and ordering than dining out, foodtech startups that provide a restaurant-like food experience with fuss-free packaging have been mushrooming over the years.