A treat for investors: Cloud kitchens raise $170m in 2019
With gaining acceptance of food delivery, cloud kitchen startups have raised $170 milion so far this year, a 10 fold increase over 2018.
FreshMenu and Box8 are seeing renewed attention after an intitial round in 2016 or 2017. Anshul Gupta, co-founder, Box8 says that full-stack cloud kitchen players which deliver food hot and within a stipulated time are seeing demand. “Our in-house fleet delivers 100% of our orders, giving us greater control over food quality,” he added.
Arun Natarajan, MD, Venture Intelligence, which tracks VC/PE activity, said that cloud kitchens of all sizes are seeing attention. “From the likes of Travis Kalanick to small VC funds, cloud kitchens are a hot favourite. While the high ticket investments go to established brands — which may not lean on to food delivery platforms and have their own fleet — smaller players — providing for more regional geographies are also being eyed by investors, because of a proven business model,” he said.
Growth in food delivery platforms is propelling growth of cloud kitchens. Ankita Vashistha, founder, Saha fund, which is one of the investors in InnerChef said that cloud kitchens are a sustainable business model with the food delivery business growing.
“The global food delivery business is growing at 15% and in India and we see a 60% growth. The business model is promising and is attractive to investors,” she said.
Companies that work with cloud kitchens also are catching investor eye.
“With the growth in the segment, there is an unbundling happening in the space with a clutch of startups which provide infrastructure to set up kitchens and others which help with branding. We have invested in companies such as Food Co works and ChapterFoods that are providing such services,” said Hari Krishnan, co-founder, Startup Loan that provides venture debt to early stage companies.