Looks like food tech startups have gone awry. The investments are at an all-time low and it seems that the food tech startups are fast losing money. With the stealthy drop in deals in 2016, the entrepreneurs have a lot to worry about.
First Things First
The drought of ’16 hit the food techs hard. From the massive record breaking 78 deals in 2015, the investment deals have reached a new low of 27. With just $684 raised this quarter, this has been the lowest quarterly funding since 2014. According to Vinod Murali, MD of InnoVen Capital, the funding will be higher for delivery while rounds maybe more for food makers. The food delivery business needs large cheques as it is a scale business. The food brand business does not need a lot of capital to prove it’s viability, since it is a high gross margin business.
The cash flow seems to be a bit of a headache for these companies with a lot of them already putting down their shutters. While Eatlo already announced it’s closure in 9 to 12 months unless money comes rolling in to ensure it’s sustenance, Bangalore-based Dazo has already shut its doors, unable to continue operations and with hopes of starting a new business. Spoonjoy, a Sachin Bansal funded startup, partnered with grocery and fresh food delivery company, Grofers.
FreshMenu is in a desperate search for fresh financing in the market although founder Rashmi Daga, refused to delve into the company’s finances while some businesses like Mealme have already had their bags packing. But it isn’t just the smaller ones who are facing the heat, the big players in food tech have their knees deep in troubled waters, too. A leaked email from Zomato CEO Deepinder Goyal, confirmed the rumours of the underperformance of the sales team. And things aren’t looking up for FoodPanda either.
With the crisis between investors and the cash flow, things aren’t looking too bright in the food tech space. A lot of these young entrepreneurs are hoping for more prospects in the upcoming year.
Read the full story by Economic Times here.