Gousto, the UK recipe kit subscription and grocery delivery service that competes with Rocket Internet’s HelloFresh, has announced the closing of £5 million ($8.3m) Series A round, led by Unilever Ventures, with existing investor MMC Ventures also participating. The investment adds to around £2 million previously raised by Gousto and shows how far its come since first being rather publicly turned down for funding on the the BBC show Dragons’ Den two years ago.
It also comes amid increasing competition from Rocket Internet’s HelloFesh, which, although taking a multi-country approach, including the U.S., recently raised a whopping $50 million D round of its own. That said, at least one competitor in the UK has thrown the towel in the ring; Sadly, Housebites quietly dead-pooled early this year, after pivoting a number of times to avoid such fate.
Founded in 2012 by Timo Schmidt and James Carter, Gousto operates a recipe kit subscription service in the UK where you are sent three recipes per-week out of a choice of ten, along with the required fresh ingredients needed, so that you can get busy in the kitchen to make each meal for two. The idea is to tap into the trends of grocery delivery and living a healthier lifestyle. It differentiates itself from competitors mainly by offering the ability to choose from a list of ten meals each week, rather than being more random, but also by using organic ingredients and offering better prices than HelloFresh, for example.
What’s interesting about these types of startups, however, is that not only are they in effect having to establish a market — being sent a recipe and ingredients, but still actually having to cook, is quite alien to many Brits — the model itself is quite far from a genuine tech play. Scaling the delivery of perishable goods isn’t quite the same as moving around bits and bytes.
To that end, Gousto says it will use the new capital to “significantly” increase investment in innovation and product development, and further improve the customer experience.
In a statement, Timo Schmidt, CEO and co-founder of Gousto, said: “The UK grocery market is worth £200bn ($330bn), and there has been a seismic shift from offline to online. Our extreme focus on quality and the fact that customer can choose the recipes they love, make Gousto completely unique. At £4-5 per meal including delivery this is a phenomenal value proposition that customers love. The funding is amazing news for customers as it will be entirely used to make their lives even easier and better.”