New Delhi:At a time when investor interest in the food-ordering market seems to be ebbing, Gurgaon-based Twigly has raised $600,000 in seed funding, and is looking to expand its kitchen-on-cloud business to Delhi and Bengaluru.

Co-founded by Sonal Minhas, ex-vice-president at venture capital firm SAIF Partners, Twigly has raised fresh capital from Bengaluru-based Tracxn Labs, Hyderabad Angels, Freecharge founder Kunal Shah and Flipkart vice-president (engineering) Gaurav Bhalotia, among others.

The company will use the money to expand into new cities and towards building a food brand that will be made available in supermarkets and online platforms.

“We are trying to create our own range of dips and drinks. Our long-term view is to be like the Yum! Brand..." Minhas said in an interview. The company is currently in the process of creating back-end infrastructure to manufacture its private label products.

“You can expect our products to be available in places such as Godrej Nature’s Basket and Le Marche within the next six months," added Minhas.

Twigly, inspired by US-based Sprig, was founded in August 2015 by Minhas, Rohan Dayal and Naresh Kumar Kachhi. It works on an online kitchen model where the food is made at a central kitchen and shipped to customers directly. The menu is limited and changes on a weekly basis.

The company, which already runs two kitchens in Gurgaon and delivers close to 150 orders a day, will open two new kitchens in Delhi and one in Bengaluru during the next 6-10 months, said Minhas.

Twigly is targeting to serve about 1,000 orders a day in the next three quarters. The company’s foray into packaged food category is expected to further boost sales. “We aim to scale the business to $100 million in sales in the next seven to eight years," according to Minhas.

Twigly, which went live seven months ago, has a customer base of 6,000 people. It witnesses a healthy repeat rate with customers ordering five to six times a month, on average. It currently has a 50-member team.

“We continue to do all this in a profitable manner. We are profitable at the unit level and at store (kitchen) level," said Minhas. According to Minhas, for a kitchen to break even, Twigly requires 80 orders a day.

In November, Twigly raised $200,000 from angel investors, including Amit Gupta, co-founder of InMobi, Mukul Singhal of SAIF Partners, TracxnLabs, an incubator backed by Flipkart co-founders Sachin Bansal and Binny Bansal, and Deepak Singh of Anzy Careers.

During the past 12-15 months several investors have pumped in millions of dollars in the food-technology sector hoping the start-ups in the space to change customer habits and order more food online. However, an overcrowded market largely driven by discounts resulted in several companies to shut down or consolidating.

For instance, Mumbai-based TinyOwl Technology Pvt. Ltd merged with logistics firm RoadRunnr (Carthero Technologies Pvt. Ltd) in May to start a new entity called Runnr to stay afloat. Internet-first kitchen Spoonjoy and restaurant aggregator Dazo, which had marquee investors Amazon India chief Amit Agarwal, Google India chief Rajan Anandan and Flipkart co-founders Sachin Bansal and Binny Bansal, shut shop in October after failing to raise substantial funds.

“A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be. We are creating new categories rather than going after established food categories where both margins and pricing power are low. By controlling the entire food ordering experience and supply chain we have been able to differentiate ourselves and induce repeat purchases, which we believe is important for early success of any start-up," added Minhas.

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