Faasos raises Rs 200 crore in fresh funding at a time of gloom for on-demand food startups

NEW DELHI: Faasos Food Services, which owns online restaurant Faasos, has raised $30 million (about Rs 200 crore), managing to secure funds at a time when several of its competitors are forced to scale down or shut shop as investors tighten their purse strings.

Russian internet-focused investment firm ru-Net led the financing, which values Faasos at $130 million-$160 million (Rs 870 crore-Rs 1,071 crore), according to two people with direct knowledge of the development. Existing investors including venture capital firms Sequoia Capital and Lightbox Ventures participated.

Following the equity-led investment, investors now hold a combined majority stake in the Pune-based food-tech startup, these people said, declining to be identified. Faasos previously raised $20 million in February in an equity and debt financing round led by Lightbox.

Faasos cofounder and chief executive Jaydeep Barman, Sequoia Capital, Lightbox and ru-Net either declined to comment on the development or did not respond to emails sent by ET.

ru-Net has been an investor in Snapdeal, India’s largest online marketplace, while also backing Snapdeal-owned mobile recharge and payments company FreeCharge and on-demand grocery delivery startup PepperTap.

Faasos’ latest fundraise comes at an opportune time for the country’s nascent on-demand food-tech sector, which investors are shying away from due to its high cash burn and perceived operational deficiencies. This after food-tech startups received massive doses of attention from risk capital investors earlier this year, making the sector one of the biggest themes of 2015.




Grocery delivery startup Grofers acquired SpoonJoy in October after the internet-first restaurant paused operations in Delhi and parts of Bengaluru unable to raise funds to sustain operations. Other food ventures including Eatlo, FreshMenu and Frsh, too, may not have enough money to sustain beyond a few months, investors said.

Faasos—founded by INSEAD and McKinsey alum Barman and Kallol Banerjee, also from INSEAD and then Bosch—operates in 15 cities across India and has more than 160 distribution centres.

Barman in an earlier conversation with ET said the company was targeting revenue of $20 million for this fiscal year ending in March 2016, and a five-fold jump to $100 million for the next.

“We’re looking at 1 million orders per month over the next six months, up from our current 350,000 orders per month. Seven months back, we were at about 70,000-80,000 orders per month,” Barman said in November, adding that about 97% of Faasos’ orders came through its mobile app.

“Questions have been raised about the (on-demand, food-tech) model, but the winners are always those who control the end-to-end supply chain, starting with the food, which is the most important component,” Barman said.

Faasos, which is seeking to evolve into a full-fledged food brand, plans to use the money from the latest fundraise for acquisitions and to begin operations in Kolkata, Chandigarh, Dehradun and other cities. The company also wants to use the funds to expand the range of its in-house brands and build new services such as Faasos Daily, a new mobile application for time-slotted food deliveries.