India’s FreshToHome raises $121 million to grow its meat and vegetable e-commerce platform

FreshToHome, an Indian e-commerce startup that sells fresh vegetables, fish, chicken and other kinds of meat, has raised $121 million in a new financing round as the Bangalore-headquartered firm reports accelerated growth spurred by the coronavirus pandemic.

The startup, which offers its service in several major Indian cities, including Delhi, Mumbai, Pune, Bangalore, and Hyderabad, is processing about 1.5 million orders a month, up from 420,000 monthly orders last year, said Shan Kadavil, co-founder and chief executive of FreshToHome, in an interview with TechCrunch.

The growing popularity of FreshToHome, which aims to “Uber-ize farmers and fishermen” for commodity exchange, comes as people become cautious about stepping outside of their homes and standing in queues in front of vegetable shops to reduce their exposure to the coronavirus. FreshToHome provides contactless delivery of “100% fresh and 0% chemicals” vegetables and meats directly to consumers’ homes.

On the platform, farmers and fishermen bid for their latest yields (as mandated by local laws) electronically. This allows them to cut the middlemen, which helps them and FreshToHome assume better control over the quality of the items and reduce the prices. (Much of the vegetable and meat sales in India is still unorganized.) The startup has also established its own supply chain network and transports items through trains and planes.

The new financing round for the startup — a Series C — was led by Investment Corporation of Dubai (the principal investment arm of the government of Dubai), Investcorp, Ascent Capital, the U.S. government’s development finance institution (DFC) and the Allana Group. As far as Series C financing rounds for consumer-focused startups goes, FreshToHome’s $121 million round is the largest to date for an Indian startup.

This is also the first time DFC has bought an equity stake in an Indian startup. It has previously lent capital to Odisha-headquartered Milk Mantra. Iron Pillar, which led FreshToHome’s Series B round, invested $19 million in the new financing round. FreshToHome has raised $154 million to date.

Kadavil, who previously headed India operations of the gaming firm Zynga and is an advisor to several startups, said raising a new round at the height of a pandemic was not necessarily difficult for FreshToHome as there is a pent-up demand from investors for this category and the startup has demonstrated impressive growth in recent quarters.

“FreshToHome is a leader in leveraging AI-based technology and business innovation to bring a superior value proposition to customers and suppliers in a large and important market,” said Khalifa Al Daboos, deputy CEO of Investment Corporation of Dubai, in a statement.

The startup, which currently clocks an annual recurring revenue of $85 million, aims to hit $200 million next year. Kadavil said FreshToHome has become EBIDTA profitable (it is generating a profit if you exclude interest, taxes, depreciation and amortization costs) in several mature cities and will now expand to more geographies. It already operates in the UAE, and plans to expand to Saudi Arabia. It also plans to expand within India and become operational in Kolkata.

FreshToHome competes with a handful of startups, including Licious, which has raised more than $94.5 million to date, and to an extent with BigBasket.