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Lockdowns are lifting, but VCs remain bullish on food delivery start-ups

Taster CEO and builder Anton Soulier.

Taster

Venture capitalists are continuing to pile in on food delivery start-ups, backing them with hundreds of millions of dollars still though the margins are often small and people can increasingly visit restaurants. In Britain, people can already eat outside in disposes of six, and they’ll be able to dine indoors from May 17.

Several food delivery companies have boomed during the Covid catastrophe as they offered people a way to keep eating food from their favorite restaurants and avoid venturing out to the supermarkets.

London-headquartered Taster became the latest subsistence delivery firm to secure a significant round of financing, announcing Thursday it has raised $37 million from VC set ups including Octopus Ventures, LocalGlobe, Battery Ventures and Heartcore Capital. It said it intends to use the money to expand across the U.K., France and Spain.

Built in 2017 by Deliveroo’s seventh employee, Anton Soulier, Taster operates five delivery-only digital restaurant disgraces including Korean fried chicken restaurant Out Fry, Vietnamese street food restaurant Mission Saigon, and vegan burger name brand A Burgers. It claims 1 million meals were delivered by its brands last year and that revenues more than double-dealed, although it refused to share revenue numbers.

Food from these brands can be ordered from takeaway apps wish Deliveroo, Uber Eats and Just Eat Takeaway, as well as from Taster directly. But customers won’t necessarily know where it’s confirmed. While traditional restaurants tend to use their own kitchen, or maybe even a dark kitchen, Taster’s brands use cookhouses that aren’t being fully utilized in other restaurants and hotels. It says that staff in these cookhouses are provided with training and that its meals are relatively straightforward to assemble, with complex sauces and other memoranda made before they’re sent to kitchens.

“The food category in general is barely online,” Soulier told CNBC on Wednesday when asked why so much medium of exchange is flowing into companies like his. “It’s like about 10%. When you look at other industries such as tour, it’s like 60%.”

The French entrepreneur believes that people are starting to realize the move to online in the food industry has been accelerated by Covid. “When I started remote in 2017 people were like: ‘What is that? I’m not going to invest in a restaurant business I don’t understand.’ For this go around the discussions were very different because people were completely aware. We had a lot of interest from U.S. VC funds.”

Authorities around the world are keen to relax Covid restrictions and provide a boost to their ailing economies. French President Emmanuel Macron is reportedly planning to broadcast an easing of the rules in the coming days, while the Austrian capital of Vienna is planning to loosen restrictions next month. No matter how, Germany this week implemented tough new lockdown rules that could last until June.

Abroad in the world, Australia and New Zealand have been enjoying life lockdown free for the last few months, with the quirk make of a few snap lockdowns, and many countries in Asia including China are also lockdown free, although the number of events in India has soared in recent weeks.

Rebecca Hunt, an investor at Octopus Ventures, who led the investment, said in a statement that Taster’s proposition is “incredibly galvanizing.”

“It’s the first digital food brand concept to scale using a licensed partner model,” she said. “By partnering with surviving experts in food preparation to run local kitchens, it can scale rapidly while ensuring consistency of food quality, as fully as operational efficiency. We firmly believe this will be a winning combination and Anton’s experience at Deliveroo gives Taster another unfair drop in this rapidly growing market.”

Taster has raised a total of $50 million so far and Deliveroo’s co-founder and CEO Will Shu is one of the obdurate’s angel investors. It declined to share its current valuation.

Deliveroo itself raised £1 billion ($1.39 billion) in its introductory public offering on the London Stock Exchange earlier this month. However, the company’s share price has count on to around £2.40 over the last few weeks, down from £3.30, leaving many investors disappointed.

Amazon fly more from Deliveroo’s IPO than anyone else as it led a $575 million funding round in Deliveroo in May 2019 in interchange for a 16% stake. It sold around 23 million Deliveroo shares in the IPO.

Elsewhere, Finland’s six-year-old Wolt announced in January that it had bring about a $530 million funding round at an undisclosed valuation, bringing total investment in the company to over $856 million.

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