Food Investment goes 'Hot' with 2016 on its way

Investment thrust in food start-ups has witnessed a rapid growth in the last two years. Over 100 companies got funded from top investors in the country, making 2015 the year of food investments. According to advisory firm Grant Thornton, investment values increased at a compounded annual growth rate (CAGR) of more than 57 per cent between 2011 and 2015 while investment volumes increased at a CAGR of over 62 per cent.

The money guzzlers

Growing with the trend, 2016 saw some more key investment in the sector by top investors investing in food business. And, what could be better than ever ending thrust for best food start-up. The most recent deal in the segment recorded $35 million investment in Swiggy, Bengaluru based food start-up from SAIF Partners, Harmony Partners and Norwest Venture Partners.

Swiggy, a food ordering and delivery platforms in India has grown over 20 times in the last few months. The online food delivery model has seen continuous growth in orders from its inception. And, this has assisted them to expand to other cities.

“After analyzing the consumer landscape in India, it quickly became clear to us that Swiggy is the food delivery company that is best positioned to win given their focus, execution, and long-term vision,” said Michael Chou, Partner at Harmony Partners. “Their growth is very strong, but moreover Swiggy provides a much better experience to customers and restaurants, the two key stakeholders in the ecosystem. We are very excited to partner with them and help broaden their lead.”

And, as the year continues to move with a bang, Ratan Tata invests an undisclosed amount in Tea chain Tea Box.  Teabox is disrupting the $40 billion tea industry with its innovations in technology and the supply chain. The company’s approach marks a clear departure from the norms of the tea industry. By applying innovations in design, supply chain and technology, Teabox is able to offer a significantly better experience to its customers across the world. And, this has led Ratan Tata, former chief of the Tata Group and currently chairman emeritus of group holding company Tata Sons help fuel Teabox’s continued growth as it expands in other major markets around the world.

“Ratan Tata needs no introduction for the kind of strategic direction and commitment he brings to the table. We have grown up admiring and respecting his vision and business acumen on scaling the Tata group to a global level. His direct guidance and experience in the tea industry will surely help us grow Teabox to be the first global premium tea brand from India,” said Kaushal Dugar, Founder and CEO, Teabox.

Healthy is ‘Trendy’

In a sector that has seen significant shake out in 2015, Freshmenu’s product market fit, stellar growth and margin profile made the Company break-out from the pack. And, its fresh meals prepared at its kitchen, has raised $17 million in Series B funding led by Zodius Technology Fund.

The transaction was initiated by Signal Hill India, with participation from existing investor Lightspeed Venture Partners.

Boozing calculations

When we talk about food, the drink has to come by itself.  B9 Beverages, a Delhi-based craft beer company, raised a $6 Mn round led by Sequoia with participation from a select set of super angels including Kunal Bahl and Rohit Bansal from Snapdeal, Deepinder Goyal from Zomato, Ashish Dhawan of ChrysCapital, and Mayank Singhal from Temasek.

This is a first for a blue chip venture capital firm to invest in an alcoholic beverage brand in India. Traditionally, stringent government regulations and political intrusions have kept investors away from this sector in India. However, this home-grown beer brand has managed to be an exception and attract the attention of the Silicon Valley based VC firm as well as other tech entrepreneurs and investors.

Thus, we can see that it’s just the begin of 2016 and food start-ups have disrupted the Indian investment ecosystem. And, with innovative trends on its way, there is exciting opportunity both for shareholders and investors.