Deals and funding to restaurant/meal delivery and grocery delivery startups have grown dramatically since 2015, as part of an overall expansion of the on-demand economy. However, investor focus has shifted between the two categories over time.
To dive into the state of on-demand dining, we used CB Insights data to compare financing to the two main segments of food delivery startups over time.
We define grocery delivery startups as those delivering uncooked groceries, including meal kits. We define meal delivery startups as startups delivering cooked meals to consumers from restaurants or from their own centralized kitchens (e.g. Munchery).
Quarterly deal history
For the first time in five quarters, the meal delivery segment attracted more deals than grocery delivery in Q3’16, with 30 deals to grocery’s 27. Grocery delivery jumped past meal delivery in Q2’15, and continued to attract more deals through Q2’16.
Deals to the segments generally move in tandem, which makes it particularly notable this quarter that grocery saw a significant decline while meal deals increased. We’ve seen the segments move inversely in only 2 earlier quarters.
Quarterly dollar funding history
Despite meal delivery startups attracting more deals in Q3, the grocery segment regained a slim lead in dollar funding last quarter, which it had previously achieved in Q1’16. Investors poured $406M into grocery delivery startups in Q3’16, compared to $376M for meal delivery startups. Both segments saw funding grow from the previous quarter.
In the meal segment, just one deal represented over 70% of total Q3 segment funding—a $275M Series E to London-based Deliveroo, from investors including General Catalyst Partners and Nokia Growth Partners. Brazil’s iFood earned the second-largest meal deal with a $30M Series F. That was followed by a $21M Series B to NYC-based Freshly.
In grocery delivery, FreshDirect raised Q3’s largest round with a $189M private equity investment from the AARP Innovation Fund, JP Morgan Partners, and W Capital Partners. Meal kit startup Home Chef ranked second with a $40M Series B, tied with a $40M investment by Alibaba Group into grocery delivery startup Shandiangou. Notably, the Alabama-based Shipt raised its $20M Series A in Q3’16; it is one of the larger delivery startups not based on either coast.
Several meal delivery giants raised multiple massive deals throughout 2015, contributing to high funding totals last year. China’s Ele.me—the category’s most well-funded startup—raised over $2.2B throughout the year, across four funding rounds. Germany’s Delivery Hero raised $563M in Q1’15 from Rocket Internet, followed by an additional $110M Series H in Q2’15. Another German meal leader FoodPanda also raised a $110M Series D in Q1’15 and a $100M Series E in Q2’15. Rocket Internet has also backed FoodPanda.
Most well-funded meal delivery and grocery delivery startups
Due in part to the spree of mega-rounds in 2015 mentioned above, the top meal delivery startups boast higher funding totals than top grocery delivery startups. Shanghai-based meal delivery startup Ele.me leads the category with over $2.3B in disclosed funding raised from Sequoia Capital China, Alibaba, Didi Chuxing, and others. FreshDirect leads the grocery category with $297M in disclosed funding, from backers including Maverick Capital, RockPort Capital Partners, and AIG Investments.
|Grocery Delivery||Meal Delivery|
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