Full stack online food delivery startup, Box8 announced on Monday that it had raised Rs 50 crore in funding from IIFL Seed Ventures Fund and Mayfield. Box8 considers its USP to be preparing and delivering Indian food, from a menu which consists of over 100 dishes in 'all-in-1 Indian meals'- biryanis, wraps, sandwiches and salads- at affordable prices.
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Started by two IIT graduates Amit Raj and Anshul Gupta, Box8 currently claims to serve 12,000 meals every day to its consumer base through a network of 60 stores across three cities Mumbai, Pune and Bengaluru. The company initially started out as Poncho in 2011 serving only Mexican dishes in the quick service format (QSR), but then expanded its menu and rebranded (to Box8) in 2014.
Box8 had initially received funding from Kaushal Aggarwal of Avendus Capital, Dheeraj Rajaram of MuSigma and Indian Angel Network before it went on to raise Rs 21 crore in series A funding round from Mayfield, in May 2015.
IIFL Seed Ventures Fund, which is the venture capital and private equity arm of IIFL Wealth & Asset Management, raised a sector agnostic fund last year to invest in both early and growth stage companies. Box8 becomes the first food business they have invested in. Prashasta Seth, CEO of IIFL AMC, said:
IIFL Seed Venture Fund has successfully invested in NBFC’s, consumer internet and technology companies. This is our first investment in food business and we are excited about it. Since inception, Box8 has taken a full stack approach, where they manage and control all aspects of the chain. From procurement, to preparation, till last mile delivery; this has helped them tremendously to offer a seamless experience and build brand loyalty.
Box8 manages an operational team of over 1,200 to operate its full stack approach model which helps them bring efficiencies in each fraction of the process chain. The startup estimates that over 85 percent of their transactions come from repeat consumers, making a strong case for a long-term sustainable model. Nikhil Khattau, Partner at Mayfield, noted that Box8's focus on classical business fundamentals combined with a new-age technology driven approach is what sets them apart. He said,
"They are very focussed on the product and are glued to the consumer need. At the same time, they have been able to scale rapidly by using technology and data effectively. We are very happy to have partnered with them and are confident in their approach.”
There is a large population which frequently eats outside and Box8 intends to become a ‘go to’ brand for this set of customers. Hence, the focus lies in preparing food which is light, easy on the stomach and made from quality ingredients, allowing the consumers to order food frequently. Talking about their operations, Anshul noted, “Real-time decision-making is the key in any operationally intensive business. With an integrated platform that cuts across customers, delivery units, kitchen and vendors, we have a live single window that speeds up decision making not just for our ground crew but also for our central teams."
Box8 also claims that product development is their core competence which differentiates them from neighbourhood restaurants. Anshul said,
Hence, all our parathas and breads are made in whole wheat, we use little oil and butter, nothing on the menu is fried, food is loaded with proteins in the form of Paneer and Chicken and we use a lot of fresh salads in our meals; basically all the things that you don't see in a neighborhood restaurant.
Amit added "We set out to be a food company and that still is the heart of the organisation. In order to be more effective in doing so, technology plays a big role. It helps us to be efficient in running operation, which in turn helps us deliver the best experience to our customer."
Food-tech is estimated to be a Rs 50,000 crore industry in India. While the Indian startup ecosystem and VCs were salivating over food-tech in 2015, 'indigestion' set in soon after as many startups were unable to make the unit economics work in the tough Indian market, where there isn't much customer loyalty. But many of the startups which battled through the tough times seem to be doing well now.
Zomato, the most funded player in this space which has also expanded internationally, claimed to be have processed 750,000 orders in May 2016. In September 2016, Swiggy raised $15 million from BVP, taking its total funds raised to $75.5 million. In October 2016, Gurgaon-based InnerChef raised $2.5 million in a Series A funding round led by Mistletoe, M&S Fund Singapore and existing investors. Some other foodtech startups that are doing well are Bengaluru-based Eatfresh, and more recent entrants like Zzungry and Cookaroo.
In an earlier interview with YourStory in July 2015, Box8 had noted that it planned to attain 10,000 orders per day mark by end of the year and also reach Rs 500 crore GMV mark in next 18 months. While they have achieved the first goal, Anshul noted,
Two key areas we are focusing on going forward are automation and prediction. While technology and data has helped us identify challenges, automation will help address them and prediction will help us understand consumer preferences better. This new influx of capital will allow us to capitalise on the opportunity by expanding to three to four more cities using the same micro-intensive approach.
Anshul noted that their focus has always been to go deep into each market and understand consumers instead of spreading wide and thin. This has helped them scale fast and develop a loyal customer base in a capital efficient manner. Anshul also believes that with the growing working class and their changing lifestyle preferences, there is immense potential to be tapped. Amit said,
We are glad that our investor partners share our vision of becoming India’s largest QSR chain for Indian food, catering to the taste buds of modern Indians. The funds help us strengthening the supply chain ecosystem, building superior technology, enhancing product development and expanding into new geographies.