WoodSpoon announced another fundraise of $14 million with some interesting investors in the mix. The platform, on which home chefs can sell their food for delivery, just announced its latest raise and teased further expansion of the community-centric, two-sided marketplace.
Founded in New York by co-founders, Oren Saar and Merav Rozengarten, who were missing their Israeli delicacies, Saar is now CEO and Rozengarten is now the company’s CMO.
The pair launched the company in 2019 and it now caters to more than 8,000 users buying food from more than 100 chefs. So far, the company operates in New York, Brooklyn and Queens with another “major city” coming in the next few months teased along with the funding announcement.
Oren Saar said the new funding further validates the foundational idea and fuels company growth much faster than originally planned. The company raised $2 million in early 2020 to focus on New York growth, but things went very well.
“The idea around the previous round was stay super focused in New York and increase our marketing team and footprint here. We started to deploy the funds in January and, since January, we’ve been growing at about 50 percent in sales, customers and chefs, so we see very rapid growth with no diminishing returns or growing customer acquisition costs,” said Saar. “The investors saw that and started reaching out.”
He said the core of the new conversations was what will happen if you raise the money now instead of a year from now which is what you’d initially planned?
“Now, we’ll be nationwide in 12 months,” said Saar.
New York startup funder World Trade Ventures was in the mix for the second time after participating in the company’s seed round, but the lead investor of this round was surprising: Restaurant Brand International (RBI). The parent company of Burger King, Tim Hortons and Popeyes might be the furthest possible thing from home cooking, but RBI COO Josh Kobza said the investment fits the company’s “digital agenda.”
“We are very excited to support WoodSpoon in its mission to develop a community-based marketplace centered around food sharing,” said Kobza. “We have been accelerating our digital agenda at RBI over the last several years and believe the future of restaurants includes a fully integrated digital experience for guests. Our journey to be a leader in the digital restaurant space includes learning about new service modes and emerging trends and we are proud to support and learn from such a passionate and talented team.”
The investment thesis for a $31 billion quick-service juggernaut like RBI seems a little murky, but Saar said RBI is a perfect match.
“RBI is looking at the forefront of technology and the future of food. This is what they do, this is why they decided to invest in new technologies and companies in food. They are also very techy and very sophisticated. I think they have a lot that they can bring to the table, they understand food, they understand marketing of food, supply chains,” Saar added.
There are a lot of new entrants into the community-centric food space raising a ton of money. Snackpass just raised $70 million. JoyRun is scaling fast and connecting peers to help each other with deliveries. There’s also a WoodSpoon peer MealMe, which also delivers home-cooked meals. It’s a very busy space and one that investors think will scale a lot like social media platforms because of the inherent social nature embedded. Saar said it was a similar thesis for investors in WoodSpoon.
“We are in interesting times, it’s COVID, people are going to the office less, people are staying home. People are looking for something to connect them. We are social human beings and we want to be connected with other people and around other people,” said Saar. “People are looking for different ways to do it. The social aspect of WoodSpoon is very active, and there’s the fact that you have a personal home chef that you can speak with and chat with and build a connection with. This is where our platform becomes interesting and gets even more fun.”
He said it’s fun, but it also drives up retention and frequency and keeps customer acquisition costs low.
The latest round brings WoodSpoon funding to a total of $16 million since it was founded in early 2019. That money will help grow the team and scale as Saar said, though the nature of home-cooked meals means there are some bumps to figure out, namely around food safety regulations. The company has a robust checklist for home chefs, but the model may still run into regulatory issues as it grows, something Saar said is a unique, but solvable challenge.
The company plans to keep expanding for the next few months with more to come. Saar wouldn’t say what “major city” was the company’s next target, but said there are a lot of metrics they’re looking at. The goal is to have many more in the next 12 months.
“We want to be at about eight to 10 new cities in the next 10 to 12 months,” said Saar.