Rocket Internet-Backed FoodPanda Raises $20M+ As It Prepares For The Next Course In Its Food Delivery Ambitions

Posted: May 7, 2013 in eCommerce, Europe, Technology

20130507-224921.jpg The food delivery wars continue to heat up: today
foodpanda, the Rocket Internet-incubated startup that
offers a one-stop service to order food from a
selection of restaurants and take-out joints to be
brought to your door and now working with some
15,000 restaurants globally, is today announcing that it has picked up over $20 million in funding, with
participation from Rocket regular AB Kinnevik,
Russia’s Phenomen Ventures as well as Rocket
Internet themselves. This is not only foodpanda’s first
reported round of investment, but it also looks like it
might be Phenomen’s first public investment in a Rocket Internet company; the VCs have previously
backed other e-commerce ventures like Fab, Hailo
and OneTwoTrip, as well as the YC-incubated video
company Virool. Foodpanda’s funding follows a number of other big
rounds for other Europe-based startups offering
similar services. They include $50 million for Delivery
Hero and $64 million for Just-Eat. The funding race is
a sign of how, in this market of a lot of me-too
players, getting critical mass and a technological edge over competitors will be key to longer-term
survival and profit. Rocket Internet, founded by the Samwer brothers,
has emerged over the years as one of Europe’s
bigger e-commerce incubators, with notable exits to
companies like eBay and Groupon. But more recently
the Samwers have been setting their sites on
emerging markets and tapping the opportunities there. In that regard, foodpanda is no exception. Including
its sub-brand hellofood, the company is now active in
27 markets — in fact, only emerging markets, with a
focus in Eastern Europe, Asia, Latin America and
parts of Africa. The total list is India, Indonesia,
Malaysia, Pakistan, Singapore, Taiwan, Thailand, Vietnam, Ghana, Ivory Coast, Kenya, Morocco,
Senegal, Nigeria, Russia, Argentina, Brazil, Chile,
Colombia, Mexico, Peru, Hungary, Venezuela,
Poland, Ukraine, Romania and Saudi Arabia. Ralf Wenzel, the global MD, says that this funding will
not only be used to expand to more countries, but
also to build out the operations into more cities in
those where it’s already active. “We do cover certain
cities already but one of the things is to expand into
new ones. For example, in Russia we have very good coverage in three cities but now we’d like to move to
17 more,” he said in an interview, adding that extra
countries are also on the agenda. “We are launching
in more Eastern European and Asian counties. We
still see a lot of markets that will be very interesting
for us.” Foodpanda claims that it is now the “market leader” in many of the countries in which it operates. On the subject of technology investments, one of
Rocket Internet’s interesting selling points is how its
companies can potentially leverage some of the other
assets in the portfolio to help their own growth.
Wenzel notes that in the case of foodpanda this might
play out in areas like customer service and logistics — using some of the same teams and backend
systems that are being rolled out for other e-
commerce operations in areas like fashion and other
merchandize. Another might be in how payments are
taken for food. Working in emerging markets,
payment card penetration is not especially high, so foodpanda is trying to come up with alternative ways
of helping people pay for their food that are potentially
more secure than simply taking cash on delivery. “Payment acceptance is an important topic for us,
how customers pay for the food that is delivered to
them,” he said. “We want to find ways of collecting
payments from restaurants without too much
overhead, and we also want to provide the best user
expeirence for that. We have started to introduce online payments, which is also an area where we will
use investment. We also have good synergies with
Payleven [Rocket’s Square competitor]. Although
there is nothing decided yet, there is definitely a lot of
potential. Fortuntately we are seeing the growth of the
availability of payment options.” While foodpanda is not transparent on its commission
structure — it varies city-by-city and depends on
whether the deal is with a chain or independent,
Wenzel says — he does note that there are some
emerging popular categories. In Russia, most order
sushi, he says; while in African countries the most popular cuisine is Mexican and in Latin America it’s
Indian food.

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