No other sector in India, right now, has captured the mindshare of investors and industry like foodtech has. We, at YourStory, have been talking to, and writing about at least one such startup on an average every day, for a few weeks now; and not without good reason. With a large addressable market of $50 billion estimated to grow 16-20% year-on-year, and more-than-healthy margins, the opportunities are endless.
Bengaluru-based mobile-only startup Dazo (previously called Tapcibo) seems to be riding high on this investor interest as it announced today a new round of funding from some of the most well-known names from the industry. Investors participating in the funding round include leading internet entrepreneurs such as Sumit Jain (co-founder and CEO, CommonFloor), Aprameya Radhakrishna (co-founder, TaxiForSure), Alok Goel (former CEO, FreeCharge). The round also saw participation from Rajan Anandan (MD, Google India), Amit Agrawal (Country Manager, Amazon India), Vinay Goel (Director Product Management, Google Maps & Local), Gaurav Munjal (Co-founder and CEO, Flatchat) and leading hospitality entrepreneurs such as Ashish Dev Kapur (co-founder, Yo! China), amongst others.
The Dazo team declined to comment on the size and manner of the deal.
Dazo is an Android app that can be used to order food on-demand. But unlike other players in the space, Dazo is not just a delivery service. The menu is curated and users are given an option to choose from 8-10 menu items for lunch and dinner. The focus is on catering to the varied tastes of the consumer with a limited, but highly curated menu. The user can order his/her choice of meal with just three taps on the mobile app. At the backend, delivery executives carry smartphones powered by algorithms and real-time tracking to get food from neighbourhood restaurants delivered to your home or office.
Previously called Tapcibo, the startup was founded in October 2014 by Shashaank Shekhar Singhal (ex-redBus director of mobile products) and Monica Rastogi (founder of Explore-in-Android). "We want Dazo to be a household name," Shashaank told YourStory about the re-branding. The inherent power of the word-of-mouth is largely dependent on the name. The founders in their discussions with users figured that Dazo was a much easier name to pronounce and relate to.
The Bengaluru-based startup started with the areas of Indiranagar, Domlur and Old Airport road. To begin with, the meals were being prepared in their own kitchen. Co-founder Monica told YourStory,
We have onboarded close to 10 food partners like Tadka Singh (for North Indian food), The Ants Cafe (for Pasta etc.), Kitchen of Joy (for Bengali food), Chai Point (for evening snacks), etc.
The company launched its services in Koramangala and Bagmane Tech Park a few days ago and is reaching out to potential customers. It has also launched a wallet through which customers can make the entire transaction cashless. Lunch, dinner and evening snack options are changed on a daily basis and include a wide variety of cuisines. There is a significant integration of technology at the backend to automate and optimize the logistics of food delivery.
The startup is serving 150+ orders on a daily basis. Lunch currently forms 75-80% of those numbers. The startup is seeing high number of repeat orders with the average customer ordering 2-3 times a week. The app has been downloaded over 4000 times and has a rating of 4.4 on the Play store.According to Shashaank, a new food partner gets as many as 20 orders on their first day as Dazo partner. "Our food partners are processing, on an average, 10+ lunch orders daily, which is a significant number for them in terms of take-away order, especially on weekdays," he added.
"Dazo has shown very high customer engagement along with industry-leading repeat rates and cohorts. The team has build a highly positive unit economics business that’s scaling rapidly through technology innovation. They haven't spent a single rupee on marketing till date," said Alok Goel, Former CEO of FreeCharge and currently CEO - New Businesses, FreeCharge.
The current team size stands at 20.
The new funds will be used for enhancing product, technology and scaling operations into many new localities.
"We want to cover entire Bengaluru within six months. The next three months are going to be very critical for us," Shashaank told YourStory.
He added that making more people aware of the app and running marketing campaigns will be the priority for the team for the next few weeks. The team is also working on awareness for the wallet to ensure that the whole experience is seamless.
Monica told YourStory that as the team launches in new areas they will be only partnering with restaurants and will not be opening their own kitchen. "We are sticklers for quality control and hence, started with our own kitchen. But with high quality food partners joining us, we'll be phasing out our own kitchen in due time," she added.
Related read: 8 food tech startups to watch out for in 2015
Speaking on this funding, Sumit Jain, co-founder and CEO, CommonFloor said, “I am very impressed with the caliber and experience of Dazo’s founding team. They have been able to build a superior product experience at such an early stage. The complementary skill sets of the seed investors and advisors will further aid the growth of the business”.
Commenting further, Aprameya Radhakrishna, co-founder, TaxiForSure said, “The food tech industry is very similar to the taxi industry with a lot of real-time logistics and tracking technologies involved. The Dazo team has built very sophisticated systems and a scalable technology platform from the inception of the business”.
The team is looking to expand. "We have many critical roles in place already," Shashaank told YourStory. Dazo is looking to hire in almost all domains - technology, marketing and operations.
The past six months have seen numerous funding news in the foodtech space. Mumbai-based food ordering app TinyOwl had raised Rs. 100 crore in its Series B round from Matrix Partners, Sequoia Capital and Nexus Venture Partners. Bengaluru-based food delivery startup Swiggy recently secured $2 million funding from Accel Partners and SAIF Partners. Not to be left behind, even biggies like Zomato and Foodpanda have entered the food delivery space.
Food is the highest frequency e-commerce segment and high ordering behavior leads to brand creation and loyalty, thus leading to strong lifetime value of a customer. Perhaps this is why even taxi players like Ola are trying to make a strong foothold in the segment with Ola Cafe.
Recommended read: Why are Indian VCs salivating over food-tech startups?