It’s piping hot, and it seems to be the in thing to do. Yes, start a food tech business and invariably you will grab the attention of investors and media? What’s driving this frenzy? Why is food-tech suddenly so hot?
Indians are passionate about food, and eating out is almost a ritual (even more so now). Even home delivery of food has increased. Something has changed in the last few years. The whole business of variety in food, process and delivery has changed.
The rise in consumerism, strong economic background, and relatively better incomes are encouraging Indians to eat out like never before. The surge in the new age food-tech startup is because of all the above reasons plus the strong fundamentals it presents to the investor community.
Food services are touted to be a $50b market growing at 16-20% year on year.
Anshoo Sharma from LightSpeed Ventures attributes the growing investor interest to the following reasons-
– Massive market, everyone eats food multiple times a day
– High repeat ordering behavior leading to the brand creation and strong lifetime value of a customer
– High margins creating room for a fundamentally strong business
– Lack of large national brands in the space and thus room to disrupt by creating such food brands and infrastructure
Kunal Walia from Khetal Advisors says, “Food-tech investments are a perfect follow-through to the recent theme of ‘Habit Forming Companies’ that have been attracting significant rounds of capital in recent times. First there were the cab companies (Ola, Taxi4sure), the service-listing companies (LocalOye, Near.in), the hyper-local delivery firms (Grofers, TinyOwl) and recently the food-tech firms. Basically, any service that allows frequent use (10-12 times in a month) per user seems to fit the major theme running at this time. Food-tech though I suspect would be the most challenging amongst the whole lot of such segments. First, you have a product (food) that people are extremely passionate about. Second, price may not be the ultimate winner (unlike cab companies). Third, local delivery/distribution has to be built from the ground up; like hyper-local delivery companies. Except, food companies will be catering either from their own kitchens or amalgamating home chefs, the logistics can be nightmarish.”
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