Amazon fund leads $104 mn investment in FreshToHome

“The capital would be used to deepen FreshToHome’s presence in the 160 cities it currently operates in," founder and chief executive Shan Kadavil said in a phone interview, referring to expanding the startup’s omnichannel presence in these markets.

Amazon Smbhav Venture Fund is the technology fund of Amazon focused on startups that digitize small and medium-sized businesses. The fund is run independently though it’s anchored by the US e-commerce giant.

Kadavil didn’t disclose the amount of funding by Amazon Smbhav.

Meanwhile, FreshToHome is looking to start operations in Saudi Arabia to add to its existing presence in the United Arab Emirates (UAE).

The company launched operations in the UAE about two years ago. UAE currently contributes 15% to the company’s overall revenues.

“In the future, omnichannel will be a focus. Today 20% of our new users are coming from stores; as a consumer brand, this helps as customer acquisition is one of the big costs," Kadavil said.

The latest funding round witnessed the participation of existing investors such as Iron Pillar, Investcorp, Investment Corporation of Dubai, and Ascent Capital. New investors like E20 Investment Ltd, Mount Judi Ventures and Dallah Albaraka also joined the round.

VCCircle was first to report in July last year on FreshToHome’s plan to raise up to $125 million in a Series D from investors, including Amazon.

Kadavil said the funding round didn’t include any secondary transactions. While he declined to comment on the valuation of the startup in the latest round, Kadavil said the company is operationally profitable.

“We are now a ‘proficorn’ with operational profitability across the company. As we strive to offer more value to our farmers and fishers, customers, employees, and investors, our focus is on profitability and sustainable value creation," he said.

“Over the last few years, we have built a strong presence. Since we source straight from farmers, our overall gross margin stands at around 40%. Our biggest advantage is sourcing, the ability to buy things at an attractive price and sell them at a mass market price, as we are positioned as a value brand. Due to this, our target market does not get saturated like how it happens in a premium segment," Kadavil said, explaining the startup’s operational strategy. JP Morgan acted as the placement agent for FreshToHome for the fundraising.

Prior to starting FreshToHome in 2015, Kadavil headed the India vertical of online game maker Zynga Inc.

Bengaluru-based FreshToHome claims to deliver over 2 million orders every month across more than 150 towns in India and most parts of the UAE. The company sells its products in all major Indian markets, including Delhi-NCR, Uttar Pradesh, Rajasthan, Punjab, Haryana, Karnataka, Andhra Pradesh, and Telangana, as well as Tamil Nadu, Kolkata, and Kerala.

FreshToHome competes with the likes of Licious, which also claims itself to be the first unicorn among consumer-facing startups. Licious, too, had in March last year raised $150 million in an extended Series F round led by Singapore-based Amansa Capital.

Captain Fresh is another startup in the segment, which recently raised an undisclosed amount in funding from Prosus Ventures (formerly Naspers Ventures) and Tiger Global Management, among others.

FreshToHome, on the other hand, last secured its equity funding in October 2020. It mopped up $121 million in a Series C round led by the Investment Corporation of Dubai--the Gulf emirate’s sovereign wealth fund, and Bahrain’s alternative investment firm Investcorp. It bagged $20 million in a Series B round led by Iron Pillar in August 2019 and three months before that pocketed $11 million in its Series A round.