HelloFresh Raises $50M For Meal Ingredients In A Box
Wall Street Journal
By LIZETTE CHAPMAN
In one of the largest funding rounds of its kind, meal kit delivery service HelloFresh GmbH has raised $50 million to continue its European and U.S. expansion.
Like Blue Apron Inc., which raised a $50 million round at a $500 million valuation two months ago, FreshDirect Inc. and less well-funded competitors like Plated Inc. and Carolinas Grocery AB, HelloFresh delivers a box of pre-measured ingredients and cooking instructions to customers for a set price.
The idea is to function as an on-demand sous chef for customers. Acting as a hybrid between two other tech food delivery services–best characterized by takeout delivery companies likes GrubHub Inc. and Delivery Hero GmbH and organic grocery delivery startups like Retail Relay Inc., Greenling Inc. and Good Eggs Inc.–meal kits from HelloFresh and others aim to enable fast and healthy meals with minimal hassle.
“It fits many of our lifestyles. The end potential of this is ginormous,” said Insight Venture Partners Managing Director Jeff Lieberman, of his firm’s decision to lead the Series D round with participation from existing investor Phenomen VC.
Since the Berlin-based startup began operating three years ago, it has grown to serve more than one million meals a month across the U.S., Germany, the U.K., Australia, the Netherlands and Austria. The company, which employs 120, will use the recent funding to continue expanding throughout Europe and enter the western U.S.
Blue Apron in April reported delivering around 600,000 meals a month to its subscribers. Both companies, like their competitors, allow subscribers to select from a variety of box meals each week. Prices range from $9 to $13 or so per meal, depending on the ingredients, which the companies pre-measure and deliver with recipe cards to customers’ doors. Typical food preparation time is around 30 minutes.
HelloFresh USA Chief Executive Seth Goldman said while he is closely watching competitors, it’s the larger landscape and small details surrounding execution that most consume him.
“We have to coordinate fresh deliveries from six vendors to get the best fish, meat, poultry and produce,” he said. “It’s scary. Every morning I’m praying that no one has made an error.”
Mr. Goldman said mistakes do happen, like running out of recipe cards or discovering that ingredients have gone bad, and HelloFresh has hustled to make it right with customers who have been largely supportive and continued the subscription service.
He said that listening to customer feedback, like to discontinue a type of udon noodle that many said was too tricky to cook, led HelloFresh to abandon an early marketing strategy of partnering with New York’s Acquavit and other high-end restaurants.
“We discovered that we’re not trying to be so fancy schmancy. We’re the company that gets food on the table every day for dinner,” Mr. Goldman said. “We recently changed our motto from ‘everything but the chef’ to ‘cooking made easy’ because not everyone aspires to be a chef. We have customers that work 80 hours a week that want an easy way to eat healthy and eat at home.”
Mr. Goldman declined to comment on valuation or revenue.
The company previously raised $20 million from investors including Holtzbrinck Ventures, Vorwerk Ventures, Rocket Internet and Kinnevik.