There are dozens of ways for people today to look for and order food online, but one startup that is focusing on how to do this best for a specific vertical has found a competitive edge. Tapingo, which has created mobile apps for iOS, Android and Facebook targeting hungry college students, is today announcing a $10.5 million round of funding led by Khosla Ventures.
It will use the funding to build out its network to more campuses, after seeing some 40% of all transactions get made through Tapingo in the 25 universities that it has already tapped — with participating institutions including New York University, the University of Southern California, University of Arizona, Northern Arizona University, Case Western Reserve University and Louisiana State University.
The opportunity in universities and food on their own is big: 4,495 institutions of higher education in the U.S. alone translates to a lot of hungry college students and universities that are still ripe for the picking.
But what seems possibly more interesting about Tapingo is whether it takes its business model, which it describes as “contextual shopping”, to other campus-style environments — not just large businesses on their own, self-contained campuses, but also those in dense cities; or even airports, malls, sports stadiums and other places where you have captive audiences.
Similarly, going back to universities, you can see how a solution like this could be used for much more than food (I think there’s a reason why the app is called “Tapingo” and not “Tapineat”).
In other words, could Tapingo leverage a wider opportunity in a similar vein as Uber? (In Uber’s case, using its network of customers and logistics to do more than simply help humans get from point A to point B.)
Extending into new areas does indeed seem to be what Tapingo has in mind.
“Our consumer-centric mentality drives our strategy on both fronts. Our goal is to impact buyers as many times as possible – where quantity of purchases is valued much higher than dollar amount,” CEO and co-founder Daniel Almog tells me. “We are currently targeting enterprise ecosystems with enough retail density to allow consumers to engage the service multiple times every day. College campuses have proven to fit that well. We do have plans to expand to other enterprises, and we are currently in the process of testing a few of those ecosystems.”
He adds that, “in choosing other verticals beyond food, we have a principal of ‘following the transactions.’ In other words, we mainly want to offer products that people are buying all the time so we can have a daily impact on their lives.”
The Series B round, which also had participation from existing investor Carmel Ventures, brings the total raised by San Francisco-based, Israeli-developed Tapingo to $14 million since 2012.
While you can order food through services like Seamless (and now Foursquare), Delivery.com, and directly through the apps of specific restaurants, and more these days, the key with Tapingo is that it tailors the restaurants that it lists, and subsequent food deals, specifically to colleges that are a part of its network.
That includes limiting listings to restaurants that are on campus or nearby; and integration with payment cards that are either university-issued or privately-held, letting students make purchases with one tap. The app includes menus for relevant eateries, and retains data on what you have ordered from each place. If you opt to pick up food, the promise is that you do not have to wait in line to get it; it also allows you to arrange for delivery if that’s offered by the eatery in question.
Commissions on the service begin at 10% for participating restaurants, with the rate likely going down based on the scale of the deployment. For users, the service speaks of convenience and good deals on food they were going to pay for regardless. Tapingo says that, in the colleges where it has been deployed, it’s finding 50% of undergraduates making purchases on Tapingo four to five times every week.
Ultimately, it’s that traction among users that has attracted Khosla Ventures.
“Tapingo has built a vibrant two-sided marketplace of students and restaurants,” notes Ben Ling, the ex-Googler, ex-Facebooker and ex-Badoo COO who is now an investment partner at Khosla Ventures. “Once someone tries Tapingo, they’re hooked and active — using it multiple times a week. Restaurants, meanwhile, see greater efficiency and enjoy more sales. Tapingo creates enormous value for micro-economies like college campuses, and we are thrilled to work with the team and help the company grow.” As part of the investment, Ling will join Tapingo’s board.
This is not Khosla’s first investment in a startup that is trying to disrupt established commerce business models. There are also stakes in payments juggernaut Stripe, retail software company Index, and Square – where Khosla partner Keith Rabois was once COO, among others.