Berlin-based Choco, which has developed a platform to make it easier for restaurants to order food from their suppliers, has closed on $30.2 million in funding.
The financing comes just six months after Choco closed on a $33.5 million Series A round led by Bessemer Venture Partners.
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Coatue Management led the latest round, which also included participation from all of the German startup’s existing backers including Bessemer Venture Partners, Atlantic Labs, Target Global, Visionaries Club and Greyhound Capital. With this new financing, Choco has raised $71.5 million in known venture funding since it was founded two years ago this month.
While the company’s headquarters (and R&D team) are in Berlin, Choco also has an office in New York as the U.S. is “a very important market” for the company, according to co-founder and CEO Daniel Khachab.
Earlier this week, I caught up with Khachab in a phone interview and he explained that Choco’s goal is to attract restaurants and suppliers to its mobile ordering platform.
That platform, the company says, gives restaurants a way to order ingredients from suppliers via a food delivery app. Suppliers then have more clarity on what they need. Historically, according to Khachab, these kinds of orders would be placed via telephone or left on voicemails, which created opportunities for errors.
With the spread of the coronavirus and ensuing pandemic, Choco says it wants to help restaurants (many of which are seeing lower revenue due to shutdowns all over the world) by launching a direct-to-consumer program. The new program will work to have the excess supply of restaurant quality, locally sourced produce from wholesale food suppliers delivered straight to consumers’ homes (safely and quickly, it says).
Khachab told me that Choco saw “15x” growth in 2019, compared to the year before. He concedes that growth compares to a fairly small base considering 2018 marked the company’s first year of operation. It has just under 200 employees spread over nine countries with a focus on the U.S. and Europe.
Nearly 90,000 orders were placed via its platform in February alone.
While Choco was not necessarily planning to raise so soon after its last round, Khachab said the terms were favorable and doubled valuation to just under $250 million.
“At this point, we still have all the money left from our October financing,” he said.
Adapting to change
Choco plans to use its new capital in part to roll out its new next-day delivery program in all 17 of its global markets, with dedicated websites set up for suppliers and consumers in each market. The company then plans to donate 100 percent of profits derived from the program to regional restaurant funds in an effort “to help local restaurants stay afloat” until restaurants reopen.
“We produce enough food for 10 billion people, yet there’s only 7 billion people in the world,” Khachab said. “This means that at least 30 percent of food produced goes to waste. And this waste is the third-largest driver of climate change.”
Choco was founded under the premise that the majority of waste is happening in the supply chain itself. In fact, it’s named after a region in Latin America that the company describes as one of the most biodiverse areas on the planet, according to Khachab.
“What we are doing at Choco is developing tools for all players of the supply chain to transact more efficiently,” he told Crunchbase News. “We’re starting with the very beginning of the supply chain, trying to make the process of restaurants getting ingredients more efficient.”
Markets include San Francisco, Chicago, Berlin, Paris and Barcelona, among others in the Netherlands, Austria, Belgium, and Brazil. Customers range from “Michelin-starred restaurants to burger chains,” the company says.
The Choco value
Choco also plans to use the new capital to serve more geographies, invest more in its product and help the restaurant industry “stay strong and financially robust” during the COVID-19 crisis.
For example, the company says it helped Krystal Fruits & Vegetables, one of its New York-based suppliers, stay in business by helping it get rid of $800,000 worth of excess stock.
“In 24 hours, we set up an ecommerce webshop, and connected them to local consumers, allowing them to deliver to homes in Manhattan and Long Island,” the company said. “In just 21 days, their business-to-consumer customer base grew from zero to 500, and they were able to retain all their staff.”
Choco also will double down on its outreach to food suppliers and restaurants, offering free digital tools. The company also will ramp up supply-side development, focusing on small-scale and local/regional food suppliers, to offer its free digital tools for managing ordering, invoicing, payment and supply management.
For restaurants, Choco will help set up streamlined mobile ordering and delivery operations, to especially help smaller, family-owned and local restaurants.
Coatue’s Chairman Dan Rose, who formerly held senior roles at Facebook and Amazon, will join Choco’s board of directors as part of the investment.
Blog Roll Illustration: Li-Anne Dias
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