Curefoods, a cloud kitchen startup founded by Ankit Nagori, has raised $62 million in a fresh round of funding, as it seeks to build a house of food brands.
Of this, $52 million has been raised in equity funding from Iron Pillar, Chiratae Ventures, Sixteenth Street Capital, Accel Partners and Flipkart co-founder Binny Bansal while $10 million is debt financing from Alteria Capital, BlackSoil Capital and Trifecta Capital. This is its Series B round and comes months after it raised $13 million in Series A from Iron Pillar, Nordstar and Bansal.
Speaking to Moneycontrol, Ankit Nagori, who co-founded Eat.Fit before Curefoods, did not disclose the exact valuation but added that it has increased 3-4 times from the last fundraise. People familiar with the development said it is likely valued in the range of $250-$400 million.
With the newly raised funds, Curefoods will now be looking to acquire mid-sized food brands that have 30-35 kitchens, clocking $8-10 million annual recurring revenue (ARR). By the end of 2022, Curefoods aims to acquire 25-30 brands. It already has over 20 brands in its portfolio.
Its business model is such that Curefoods will need to keep raising debt and equity to acquire these brands. It is paying a revenue multiple of 1X-2X to buy these brands.
“We are looking at brands that are leaders in their categories on Swiggy and Zomato, but if these brands have an omnichannel presence, that is completely fine,” said Nagori.
The company is currently in talks with 5-6 brands, and is looking to acquire at least 3-4 of these in the next 6-9 months, said Nagori. Curefoods currently operates 100 cloud kitchens in 12 cities and plans to add another 100 by end of this year growing its presence across 20 cities.
The Bengaluru-based company recently acquired brands including Juno's Pizza, Cupcake Noggins (which it will merge into its existing bakery brand CakeZone), organic ice-cream brand Iceberg, Nomad Pizzas, and Jaipur-based multi-brand cloud kitchen White Kitchens. The other acquired brands include CakeZone, MasalaBox and Paratha Box while it also has exclusive online franchising rights for three brands: YumLane, Sharief Bhai, and Aligarh House.
The company would be looking at scaling three of its brands nationally- Eat.fit, Great Indian Kitchen and CakeZone.
He also added that after the acquisition, these brands are expected to grow 4-5x in the first few years. “We are also building our own apps and websites for our portfolio brands and aim to target 30-35 percent of the orders directly from these platforms,” said Nagori.
Curefoods will also be looking at increasing prices by around 3-5 percent this quarter across its portfolio brands on the back of an increase in commodity and fuel prices. Moneycontrol reported on January 11 that ordering on Swiggy and Zomato will get costlier as restaurants and cloud kitchens are looking to increase prices because of inflation and deeper discounts on these platforms.
This space is one of the hottest at the moment, as CureFoods is following an approach similar to the one followed by US-based breakout startup Thrasio, which acquires top-rated and fast-growing sellers on Amazon, helping them with technology, digital marketing and sales chops to turbocharge growth.
While CureFoods, Box8 and Biryani by Kilo are looking at acquiring and scaling brands, Rebel Foods which turned unicorn last year, has built cloud-kitchen brands such as Berhouz Biryani and Ovenstory Pizza by starting each brand themselves and plans to invest $150 million in strategic brand investments and acquisitions in India and globally.
These platforms are riding on the momentum in food delivery platforms, as more people are ordering food online post COVID-19. It is estimated that Zomato and Swiggy together deliver over 3 million orders a day- a number that can potentially double over the next decade. It will still be far lesser than the tens of millions that a Meituan does in China or a DoorDash does in the US. It is estimated that non-home cooked food or restaurant food accounts for only 10% of food consumption in India vs 54% in the US.
In 2020, Nagori acquired a 70-80 percent stake in Eat.fit, the cloud kitchen focused on healthy eating, in exchange for his 7.6 percent stake in Cure.fit.
Before co-founding Cure.fit, Nagori served as chief business officer of online retailer Flipkart, and was among the key leaders in the company.