Food delivery racked up the most deal activity of any category within the broader on-demand economy in the last five years as startups crowded into the space. To better understand investor interest in this industry and how it has evolved, we separated it into two broad categories — meal and grocery delivery — and drilled into funding trends for each:
- Meal delivery: Prepared meal delivery and restaurant delivery (e.g., Ele.me, Delivery Hero, FoodPanda, Munchery)
- Grocery delivery: This category includes grocery delivery (e.g., Instacart, Door to Door Organics) and meal kits (e.g., HelloFresh, Blue Apron). Meal kits are included since these serve as an alternative distribution channel for groceries and produce.
Using CB Insights data we found that grocery delivery startups have consistently outpaced their counterparts in meal delivery in terms of annual deal activity, while meal delivery historically took more dollars. But as investor interest in both categories waned in 2016 year-to-date (funding to food delivery broadly was down 69% in Q1’16), grocery delivery startups gained the upper hand in dollar funding.
Annual deals: grocery maintains its lead
Grocery delivery startups have maintained a slight lead in deal count over meal delivery since 2012, peaking with 136 deals in 2015 compared to 125 meal delivery deals. This year, grocery delivery startups received 26 funding rounds to-date, while meal delivery startups received 16.
Based on year-to-date data, the grocery category will widen it lead in deals over meal delivery in 2016. Last year, grocery delivery ended the year with 8% more deals than meal delivery. This year it’s on track for roughly 40% more deals than meal delivery.
Annual dollars: Grocery projected to overtake meals for first time
Since 2012, meal delivery startups have raised over $5.5B cumulatively, compared to just $3.1B for grocery delivery — even though deal count to grocery delivery is higher, as we just saw.
Putting together deals and dollar funding data, that means the average disclosed deal size to meal delivery startups, at roughly $25M, is nearly twice as large as the average grocery deal of $13M.
Multiple mega-rounds raised by top meal delivery players inflated the average meal delivery deal size between 2012 to 2015. Since 2012, meal delivery startups have raised 11 mega-rounds ($100M+ deals) distributed across just six companies (Ele.me, Delivery Hero, FoodPanda, Takeaway.com, DoorDash, and Deliveroo). Grocery delivery, on the other hand, counts just four mega-rounds over the same period, to four companies (Womai, BigBasket, Blue Apron, and Grofers).
But grocery delivery startups have raised $429M in 20160 year-to-date, compared to $352M for meal delivery startups, meaning grocery is on pace to beat meal delivery in funding for the first time.
Quarterly meal delivery financing
Meal delivery deal count peaked in Q4’15 with 35 deals worth nearly $1.5B, but dropped to a five-quarter low of $257M in Q1’16
China’s Ele.me is the giant in the space and it raised three mega-rounds in 2015 that contributed to meal delivery’s funding peaks in Q1’15, Q3’15, and Q4’15. (In fact, without the massive $1.25B investment from Alibaba and Ant Financial Services Group, funding in Q4’15 would have dropped to a three-quarter low, instead of a record high.)
Quarterly grocery delivery financing
Grocery delivery deals climbed for four straight quarters, from Q4’14 to Q4’15, before dropping dramatically in Q1’16. The peak in Q4’15 — the same quarter as meal delivery’s peak — represented 39 deals worth $528M. Two deals accounted for two-thirds of Q4’15 funding: a $220M Series C to China’s Womai, and a $120M Series C to India’s Grofers.
Though deal count decreased significantly in Q1’16, the quarter actually ranked second in funding dollars with $357M.
Due to several large deals (including a $250M Series D round to India-based BigBasket), grocery delivery startups pulled in 39% more dollars than meal delivery startups in Q1’16, the first quarter since Q2’15 that grocery delivery startups drew more dollars.
Cover image credit: Flickr/mst7022
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