Twigly, a Foo-tech Startup raises $200,000 from angel investors.
Investment comes at a time when interest in the food-ordering market is ebbing and start-ups are struggling to expand.
Gurgaon, India | Red Newswire. Mon, Nov 02 2015. 02:30 PM IST.
Despite a few food-tech start-ups shutting shops and some others struggling to expand, entrepreneurs continue to experiment with the category in India.
Sonal Minhas, 34, after spending over four years as vice-president at venture capital firm SAIF Partners, where he closely worked on the food and beverage industry, decided to take the plunge and start Twigly—a kitchen-on-cloud business.
Twigly, inspired by US-based Sprig, was founded in August by Minhas, Rohan Dayal and Naresh Kumar Kachhi. It works on an online kitchen model: the food is made at a central kitchen and shipped to customers directly. The menu is limited and changes on a weekly basis.
Sprig, a San Francisco-based company, recently raised $45 million, and focuses on delivering affordable organic food. While Twigly currently emphasizes on-demand delivery of quality and fresh food, it aims to replicate Sprig’s success in India.
Gurgaon-based Twigly said on Monday that it had received $200,000 from angel investors, including Amit Gupta, co-founder of InMobi, Sahil Barua, co-founder of logistics firm Delhivery, Mukul Singhal of SAIF Partners, TracxnLabs, an incubator backed by Flipkart co-founders Sachin Bansal and Binny Bansal, and Deepak Singh of Anzy Careers.
The investment comes at a time when investor interest in the crowded food ordering market is ebbing as the market readies to witness consolidation or strategic investments.
Earlier this month, Mint reported that food-tech start-up Dazo decided to shut shop barely a year after it started operations and TinyOwl Technology Pvt. Ltd was cutting jobs and freezing expansion plans as the company was facing delays in closing its next round of funding.
SpoonJoy, another food-ordering app, shut down its operations this month and the team was acquired by hyperlocal delivery start-up Grofers. Since the start of the year, investors have pumped in $150 million into 20 food-ordering (and food-delivery) start-ups.
According to Twigly founders, from day one, the company has been making profits on every transaction and is focused on maintaining a healthy bottom line. “Fundamentals of the business should be right to begin with. Food as a category has margins anywhere from 50-60% and companies should not be losing money,” said Minhas, pointing to the high cash burn at some of the other food-tech companies.
“Our differentiator is our high ticket size and how well we manage our costs,” Minhas added, when asked about the high failure rate in the food-tech businesses in the country.
Twigly, which opened its consumer website and mobile app on 16 September, today ships close to 40 orders a day with an average ticket size of Rs.500. The company’s 600 sq. ft kitchen in Gurgaon’s Sector 26 has the capacity to address 120-150 orders in a day.
Gurgaon’s Sector 26 area has several food kitchens. At 10.30am, the kitchens are abuzz with lunch preparation. While Twigly focuses on international cuisine, from Sri Lankan prawn curry to Italian beetroot pasta and falafel sandwiches, the kitchen next door is soaked in the fragrance of Hyderabadi food made by Biryani by Kilo, and just a few yards away is the kitchen of a famous bakery. Parked outside the building are bikes from various food-delivery firms, such as Quikli and Opinio.
Twigly has four delivery boys on the payroll and delivers only to some parts of Gurgaon. It plans to add another kitchen in the next 45 days, which will be able to address 400 orders a day.
The company said that while it will continue to own some part of the delivery fleet to maintain a better customer experience, it will also partner with third-party hyperlocal delivery companies such as Opinio in the future.
In the next three months, Twigly will expand its presence to Delhi, according to Minhas.
“Eating out is still a large space and Sonal has the experience of working with food companies closely. I see Twigly as the Internet-enabled Subway of India. Execution is something that will distinguish them from the others,” said Tracxn co-founder Abhishek Goyal.