Singapore’s Grain, a profitable food delivery startup, pulls in $10M for expansion

Cloud kitchens are the big thing in food delivery, with
ex-Uber CEO Travis Kalanick’s new business one contender
in
that space, with Asia, and particularly Southeast Asia, a major
focus. Despite the newcomers, a more established startup from
Singapore has raised a large bowl of cash to go after regional
expansion.

Founded in 2014, Grain
specializes in clean food while it takes a different approach
to Kalanick’s CloudKitchens or food delivery services like
Deliveroo, FoodPanda or GrabFood.

It adopted a cloud kitchen model — utilizing unwanted real
estate as kitchens, with delivery services for output — but used
it for its own operations. So while CloudKitchens and others rent
their space to F&B companies as a cheaper way to make food for
their on-demand delivery customers, Grain works with its own
chefs, menu and delivery team. A so-called ‘full stack’ model
if you can stand the cliched tech phrase.

Finally, Grain is also
profitable. The new round has it shooting for growth — more on
that below — but the startup was profitable last year, CEO and
co-founder Yi Sung Yong told TechCrunch.

Now it is reaping the rewards of a model that keeps it in
control of its product, unlike others that are complicated by a
chain that includes the restaurant and a delivery person.

We previously wrote about Grain when it raised a
$1.7 million Series A
back in 2016 and today it announced a $10
million Series B which is led by Thailand’s Singha Ventures, the
VC arm of the beer brand. A bevy of other investors took part,
including Genesis Alternative Ventures, Sass Corp, K2 Global —
run by serial investor Ozi Amanat who has backed Impossible Foods,
Spotify and Uber among others — FoodXervices and Majuven.
Existing investors Openspace Ventures, Raging Bull — from Thai
Express founder Ivan Lee — and Cento Ventures participated.

The round includes venture debt, as well as equity, and it is
worth noting that the family office of the owners of The Coffee
Bean & Tea Leaf — Sassoon Investment Corporation — was
involved.

Grain covers individual food as well as buffets in Singapore

Three years is a long gap between the two deals — Openspace
and Cento have even rebranded during the intervening period — and
the ride has been an eventful one. During those years, Sung said
the business had come close to running out of capital before it
doubled down on the fundamentals before the precarious runway
capital ran out.

In fact, he said, the company — which now has over 100 staff
— was fully prepared to self-sustain.

“We didn’t think of raising a Series B,” he explained in
an interview. “Instead, we focused on the business and getting
profitable… we thought that we can’t depend entirely on
investors.”

And, ladies and gentleman, the irony of that is that VCs very
much like a business that can self-sustain — it shows a model is
proven — and investing in a startup that doesn’t need capital
can be attractive.

Ultimately, though, profitability is seen as sexy today —
particularly in the meal space where countless U.S. startups has
shuttered including
Munchery
and
Sprig
— but the focus meant that Grain had to shelve its
expansion plans. It then went through soul-searching times in 2017
when
a spoilt curry saw 20 customers
get food poisoning.

Sung declined to comment directly on that incident, but he said
that company today has developed the “infrastructure” to scale
its business across the board, and that very much includes quality
control.

Grain co-founder and CEO Yi Sung Yong [Image via LinkedIn]

Grain currently delivers “thousands” of meals per day in
Singapore, its sole market, with eight-figures in sales per year,
he said. Last year, growth was 200 percent, Sung continued, and now
is the time to look overseas. With Singha, the Grain CEO said the
company has “everything we need to launch in Bangkok.”

Thailand — which
Malaysia-based rival Dahamakan picked for its first expansion

— is the only new launch on the table, but Sung said that could
change.

“If things move faster, we’ll expand to more cities, maybe
one per year,” he said. “But we need to get our brand, our
food and our service right first.”

One part of that may be securing better deals for raw
ingredients and food from suppliers. Grain is expanding its
‘hub’ kitchens — outposts placed strategically around town to
serve customers faster — and growing its fleet of trucks, which
are retrofitted with warmers and chillers for deliveries to
customers.

Grain’s journey is proof that startups in the region will go
through trials and tribulations, but being able to bolt down the
fundamentals and reduce burn rate is crucial in the event that
things go awry.
Just look to grocery startup Honestbee
, also based in
Singapore, for evidence of what happens when costs are allowed to
pile up.

Source: FS – All Tech News 2
Singapore’s Grain, a profitable food delivery startup, pulls in M for expansion