Bengaluru: Food technology start-up Box8 (Poncho Hospitality Pvt. Ltd) has raised Rs50 crore ($7.5 million) in a Series B funding round led by IIFL Seed Ventures Fund, a unit of IIFL Holdings Ltd, and existing investor Mayfield Fund, said two people aware of the development.
Box8 was started by Indian Institute of Technology-Kharagpur alumnus Amit Raj and Indian Institute of Technology-Bombay alumnus Anshul Gupta as Poncho, a quick service restaurant for Mexican food, in July 2012. In January 2014, the company changed its menu to Indian food and rebranded itself Box8.
Box8 is a full-stack service provider that handles everything from procurement of raw materials and preparation of the food to delivery. It is currently operational in Mumbai, Pune and Bengaluru and offers an assortment including ice creams, meal boxes, wraps, sandwiches, salads and desserts.
Box8 co-founder Anshul Gupta confirmed the development.
“With this round, we intend to go deeper into the cities where we are present and start operations in Delhi, Chennai and Hyderabad in the next 12 months. Apart from geographical expansion, we want to invest in technology. We want to drive more automation and personalization,” Gupta said.
The company currently operates three central kitchens, one in each city, and 50 delivery centres.
“We do about 12,000 meals every day. An order would comprise 2-2.5 meals on an average and an average basket value would be north of Rs400,” Gupta added.
The company had earlier raised at least $3.5 million from Mayfield Fund and a clutch angel investors including Mu Sigma Inc. founder and chief executive Dhiraj Rajaram and Kaushal Aggarwal, co-founder and managing director at Avendus Capital and Indian Angel Network.
The company ran into trouble when about 20 children fell ill after consuming food it delivered in Mumbai in April. The Food and Drug Administration gave a clean chit to the company in June.
The funding comes at a time when venture capital firms have become more cautious about investments. According to industry experts, the mandate has now shifted to earning revenue and reducing cash burn, as against splurging millions of dollars on customer acquisition.
Food start-ups, among the most attractive segments for investors once, have been one of the worst affected.
According to Tracxn, a start-up tracker, 589 food tech start-ups were founded in 2015, of which 49 got funded. Total investment into the sector last year stood at $201.7 million. The number of food tech start-ups founded shrunk significantly to 93 this year, of which only 24 attracted venture capital firms. Investment into food tech start-ups in 2016 stood at $115.2 million, of which food delivery start-up Swiggy alone accounts for $57 million.
Some of them have shut down following a slowdown in investment, while some have been acquired by well-capitalized rivals. While Internet-first kitchen Spoonjoy (Emvito Technologies Pvt. Ltd) was bought by hyperlocal delivery start-up Grofers (Locodel Solutions Pvt. Ltd) in October last year, another start-up, Dazo, shut shop the same month. Eatlo Tech Solutions Pvt. Ltd closed down in December. Tinyowl Technology Pvt. Ltd, one of the most well-funded start-ups in the segment, merged with hyperlocal delivery start-up Roadrunnr in June this year.
Even Zomato Media Pvt. Ltd, the most funded home-grown food tech start-up, with about $224 million in its war chest, trimmed its workforce last year.