Rebel Foods in talks to raise $120 million in fresh round led by Temasek

Rebel Foods co-founder and CEO Jaydeep Barman

Rebel Foods, the cloud kitchen startup that runs brands such as Faasos, Oven Story, Behrouz Biryani and others, is in talks to raise $120 million (around Rs 1,000 crore) in a fresh round led by Singapore’s Temasek, people aware of the developments told Moneycontrol.

Once completed, this will mark the return of yet another large ticket funding round (over $100 million) in the Indian startup ecosystem. Over the past months, large startups like Zepto, Meesho and others have raised large amounts of capital and signalled that while capital is available, investors are cherry picking companies and only backing the ones that have shown potential to growth further.

Mumbai-based Rebel Foods is raising money at a blended valuation of around $1 billion. About half of the $120 million will be primary capital and the remaining will be in secondaries, according to one of the sources cited above

In a primary round the money goes directly into the firm’s bank accounts and in a secondary transaction company shares are just transferred from one investor to another. Nothing goes into the company’s coffers.

Investors such as Coatue and Lightbox are selling shares in Rebel Foods at a valuation of around $700-800 million and the company is commanding a valuation of around $1.3 billion while raising primary capital which essentially translates to a blended valuation of $1 billion, the people cited above told Moneycontrol. To be sure, negotiations are still underway so the deal contours may change.

A blended valuation is arrived at by taking into consideration the valuation of the company during the secondary transactions and primary round.

While Temasek said it does not comment on market speculation, Rebel Foods denied such discussions. “We deny any advanced stage of fundraising conversations with (any) specific investor. Rebel continues to have preliminary discussion with investors and evaluate for any strategic partner in its next stage of scale up journey,” a company spokesperson told Moneycontrol on August 24 in an email response.

For Rebel, the round that it is stitching together now will be reminiscent of the one it put together three years ago. July 2021 was when Rebel last closed a large round, of over $100 million, at a valuation of $1 billion (and entered the coveted unicorn club) and now, in August 2024, Rebel is again raising more than $100 million at a valuation of $1 billion.

The company closed smaller rounds in between which propelled Rebel’s valuation to $1.4 billion but is now back to around $1 billion. Not just Rebel, several other late-stage startups have seen their valuations being reset from 2020/21 highs. In fact, some companies like Oyo have even raised money at a 70 percent valuation cut.

“Rebel’s round has been in the works for about a year now and the company has reached a deal because it has managed to bring down its monthly cash burn thanks to belt tightening measures like reducing workforce, reducing overall spends etc undertaken over the past year,” one of the people cited above said.

The company was burning around Rs 50 crore (roughly $6 million) a month in FY23 but that has halved that to about Rs 25 crore (around $3 million) now, sources told Moneycontrol. “The company currently has an annualised revenue run rate of $220-240 million,” a second person in the know told Moneycontrol.

Large ticket funding rounds in 2024

In FY23, Rebel Foods had a top line of Rs 1,258 crore, up 39 percent from Rs 907 crore clocked in FY22. It incurred a loss of around Rs 657 crore in FY23, a 23 percent increase from Rs 534 crore in FY22, according to Tracxn, a private markets data provider.

Offline play

While the primary capital will be used for general business expansion, Rebel Foods, similar to other consumer companies, will also use the money to double down on its omnichannel play by expanding its offline presence.

The company is aiming to have a total of 100-250 physical outlets according to various media reports. It even toyed with the idea of an offline food court, where all its nine brands will be available under the same roof.

Not just Rebel, other cloud kitchen startups have been expanding into offline stores as they look to tap a growing audience base and increase revenue streams. Founded in 2011 by Jaydeep Barman and Kallol Banerjee, the company, which competes with Binny Bansal-backed Curefoods, Tiger Global-funded Eatclub and others, has raised over $500 million according to Tracxn data.