Cloud kitchens are top of mind in food distribution, as former Uber CEO Travis Kalanick’s new nominee in that space, with Asia, and in particular Southeast Asia, is a major focus. Despite the newcomers, a more established Singapore startup has raised a lot of money to go after regional expansion.
Founded in 2014, Grain specializes in clean food while taking a different approach than Kalanick’s CloudKitchens or food delivery services like Deliveroo, FoodPanda or GrabFood.
It adopted a cloud kitchen model, using unwanted real estate as kitchens, with delivery services for production, but used it for its own operations. So while CloudKitchens and others rent their space to F&B companies as a cheaper way to make food for their on-demand delivery customers, Grain Work with your own cooks, menu, and cast crew. A model called a “full stack” if it can handle the cliche tech phrase.
Finally, grain It is also profitable. The new round propels it to grow, more on that later, but the startup was profitable last year, CEO and co-founder Yi Sung Yong told TechCrunch.
You are now reaping the rewards of a model that keeps you in control of your product, as opposed to others that are complicated by a chain that includes the restaurant and a delivery person.
We previously wrote about Grain when it raised a $ 1.7 million Series A in 2016 and today announced a $ 10 million Series B, led by Singha Ventures of Thailand, the VC arm of the beer brand. A host of other investors participated, including Genesis Alternative Ventures, Sass Corp, K2 Global, led by serial investor Ozi Amanat who has backed Impossible Foods, Spotify and Uber, among others, FoodXervices and Majuven. Existing investors Openspace Ventures, Raging Bull, Thai Express founder Ivan Lee, and Cento Ventures participated.
The round includes venture debt as well as equity, and it’s worth noting that the family office of The Coffee Bean & Tea Leaf owners – Sassoon Investment Corporation – was involved.
Three years is a long gap between the two deals (Openspace and Cento have even rebranded during the intervening period) and the journey has been memorable. During those years, Sung said the business had nearly run out of capital before it doubled down on fundamentals before the track’s precarious capital ran out.
In fact, he said, the company, which now has more than 100 employees, was fully geared towards self-sufficiency.
“We are not thinking of raising a Serie B,” he explained in an interview. “Instead, we focus on the business and make a profit … we think we can’t completely depend on investors.”
And, ladies and gentlemen, the irony of that is that virtual companies are a lot like a business that can be self-sustaining (shows that a model is proven), and investing in a startup that doesn’t need capital can be attractive.
Ultimately, though, profitability looks attractive today, especially in the food space where countless US startups have closed, including Munchery and Sprig, but the focus meant that Grain had to sideline. your expansion plans. Then he went through a period of introspection in 2017, when a spoiled curry saw 20 customers get food poisoning.
Sung declined to comment directly on that incident, but said the company today has developed the “infrastructure” to scale its business overall, and that includes a lot of quality control.
Grain currently delivers “thousands” of meals a day in Singapore, its only market, with eight figures in sales per year, he said. Last year, the growth was 200 percent, Sung continued, and now is the time to look abroad. With Singha, the CEO of Grain said the company has “everything we need to launch in Bangkok.”
Thailand, which Malaysia-based rival Dahamakan chose for its first expansion, is the only new release on the table, but Sung said that could change.
“If things move faster, we will expand to more cities, maybe one a year,” he said. “But first we have to get our brand, our food and our service right.”
A part of that may be securing better raw food and ingredient deals from suppliers. Grain is expanding its hub kitchens, strategically placed outposts in the city to serve customers more quickly, and increasing its fleet of trucks, which are retrofitted with heaters and coolers to deliver to customers.
Grain’s journey is proof that startups in the region will go through trials and tribulations, but being able to cut fundamentals and slow burn is crucial in the event that things go wrong. Just look at Honestbee grocery store, also based in Singapore, for evidence of what happens when costs are allowed to pile up.