WI Harper Group | September 14, 2021 | Source: TechCrunch
GrubMarket, which provides software and services that help link up and manage relationships between food suppliers and their customers, has raised $120 million at a $1B+ pre-money valuation in a Series E round of funding.
The funding is coming from a wide mix of new investors: Liberty Street Funds, Walleye Capital, Japan Post Capital, Joseph Stone Capital, Pegasus Tech Ventures, Tech Pioneers Fund; along with existing investors: Celtic House Asia Partners, INP Capital, Reimagined Ventures, Moringa Capital Management, and others unnamed participants.
WI Harper Group previously participated in GrubMarket’s oversubscribed $90 million Series D financing in October 2020 and led its $25 million C+ round of financing in April 2019.
Founded in 2014, GrubMarket got its start several years ago as one of many companies looking to provide a more efficient farm-to-table service. Tapping into a growing consumer interest in higher quality, and more traceable food, it saw an opportunity to build a platform to link up producers to the consumers, restaurants and grocery stores that were buying their products. (Grocery stores, incidentally, might be independent operations, or something much bigger: one of GrubMarket’s biggest customers is Whole Foods, which uses GrubMarket for produce supply in certain regions of the U.S. It is currently is the company’s biggest customer.)
GrubMarket — like many other grocery delivery services — found that the pandemic initially provided a big fillip, and a big rush of demand, from that consumer side of the business, as more people turned to internet-based ordering and delivery services to offset the fact that many stores were closed, or they simply wanted to curtail the amount of shopping they were doing in-person to slow the spread of Covid-19. But fast forward to today, while the startup still serves consumers, this is currently not the primary part of its business. Instead, it’s B2B2C, serving companies that in turn serve consumers.
The opening for GrubMarket has been not just positioning itself as a middleman between producers and buyers, but to do so by way of technology and consolidating what has been a very regionalized and fragmented market up to now. GrubMarket has snapped up no less than 40 companies in the last three years. While some of these have been to help it expand geographically (it made 10 acquisitions in the Los Angeles area alone), many have also been made to double down on technology.
These have included the likes of Farmigo, once a Disrupt Battlefield contender that pivoted into becoming a software provider to CSAs (an area that GrubMarket sees a lot of opportunity), as well as software to help farms manage their business staffing, insurance and more: Pacific Farm Management is an example of the latter. GrubMarket’s own in-house software, WholesaleWare, a cloud-based service for farmers and other food producers, saw its sales grow 3,500% over the last year, and it is now managing more than $4 billion in wholesale and retail activity across the U.S. and Canada.
There will be obvious ways to extend what GrubMarket does deeper into the needs of its customers on the purchasing end, but this is in many ways also a very crowded market. (And not just crowded, but crowded with big companies. For example, Toast, the company that builds software for restaurants, filed for a $717 million IPO at potentially a $16.5 billion valuation.) So instead, GrubMarket will continue to focus on what has been a more overlooked aspect, that of the suppliers.
Mike Xu, GrubMarket’s founder and CEO, says that the company is currently profitable in a big way. It’s now at a $1 billion annualized run-rate, having grown revenues 300% over last year, with some markets like New York growing even more (it went from less than $10 million ARR to $100 million+). With operations currently in Arizona, California, Connecticut, Georgia, Michigan, New York, New Jersey, Missouri, Massachusetts, Oregon, Pennsylvania, Texas, and Washington, and some 40 warehouses nationwide. GrubMarket will be looking to grow even more, both in terms of territory and in terms of tech, moving ahead in a market that is largely absent from competitors.
“We are still the first mover in this space,” Xu said when I asked him in an interview about rivals. “No one else is doing consolidation on the supply chain side as we are. We are trying to consolidate the American food supply chain through software technologies, while also trying to find the best solutions in this space.”
Longer term, the plan will be to look at an IPO provisionally filing the paperwork by summer 2022, Xu added.
| About WI Harper Group
WI Harper is a pioneer and leading cross-border venture capital firm investing in early and expansion stage companies globally. With offices in San Francisco, Beijing, and Taipei, the firm actively oversees more than $1 billion in assets under management. Since inception nearly three decades ago, WI Harper has invested in over 400 startups and has successfully experienced more than 100 IPO and M&A exits.
We look for innovative companies and visionary founders in healthcare, technology and sustainability fields where there are high synergies and meaningful value-added cross selling opportunities. While our healthcare team is presently honing on bioinformatics and digital biology, our technology team is focused blockchain, big data, analytics, artificial intelligence, AR/VR, IoT, robotics, drones, autonomous driving, as well as digital media and green energy projects.
