Online grocery platform Farmdrop raises £7M Series A led by Atomico

Farmdrop, a farmer-friendly online grocery platform based in the U.K., has raised £7 million in Series A funding. Leading the round is Atomico, the London VC fund founded by Skype co-founder Niklas Zennström.

Originally launched in 2014 as a ‘click and collect’ service that let you order groceries online direct from farmer-producers and pick up your order at a local collection point, the company has since pivoted to door-to-door delivery but with the same basic idea of a marketplace that bypasses the mass supermarkets.

“The fundamental problem is that the supermarket’s dominance over the last fifty years has put huge amounts of downward pressure on farmgate prices,” explains Farmdrop co-founder Ben Pugh. “In this environment, the only option for producers has been to focus on yields and durability which has led to a big depreciation in the taste and nutritional quality of homegrown foods”.

To counteract this, the Farmdrop platform claims to remove (or replace) wholesalers and retailers from the supply chain, which enables it to pay producers roughly double what they would get from a supermarket. Specifically, I’m told that farmers receive around 75 per cent of the final shelf price. To put this in context, Pugh says that most farmers would be lucky to get 50 per cent from the supermarkets.

“Basically, Farmdrop is creating a profitable route to market for smaller farmers whose sole aim is grow foods that maximise flavour and nutrition. For customers we offer them the most affordable access to the freshest, farmer’s market quality ingredients,” he says.

Meanwhile, I’m told that the startup plans to use the new funding to improve customer experience, develop new technology for farmers to manage their own inventory, and launch new distribution hubs outside of London, with an opening in Bristol planned for later in 2017. It also says it reached annualised revenues of £3 million earlier this year.

Atomico’s Zennström comments: “Atomico likes to invest in companies looking to tackle some of the bigger sustainability challenges our planet is facing. That is why we’re incredibly proud to have led Farmdrop’s second investment round. They are deploying innovative technology to simplify the food chain and meet the growing demand for more sustainably sourced, local food”.

In addition to Atomico, Farmdrop’s other backers include Jon Reynolds, the CEO and co-founder of SwiftKey, Alex Chesterman, the founder of Zoopla, Nigel Wray, serial investor and chairman of Saracens Rugby club, and Quentin Griffiths, the co-founder of Asos.