Gousto, the U.K. cook-at-home recipe kit service that competes most directly with Rocket Internet’s HelloFresh, has kept up its funding by raising a further £10 million. This latest round was backed by BGF Ventures, Unilever Ventures, MMC Ventures, Angel CoFund, and Barclays, and is a mixture of equity and debt financing.
The London-based company, set up by former Rothschild bankers Timo Boldt and James Carter in 2012, only operates in the UK, which is emerging as one of the most competitive markets. It offers a new take on grocery orders: they prepare the exact quantities of ingredients for at least two meals a week and deliver them, with cooking instructions, to customers’ homes. It fosters a well thought out recipe kit service that sends you perfectly portioned fresh ingredients matched to each recipe. This not only enables you to save money by only buying exactly what is needed to cook but if executed well, the service itself can run a lot more efficiently than a national grocery store chain’s offline or online offering.
Investors have poured money into dozens of start-ups with similar business models, funding companies including Abel & Cole, Simply Cook and Marley Spoon in the UK.
Gousto founder and CEO Timo Boldt, in a statement to TechCrunch, says that the startup plans to use the new capital to continue improving the experience for customers, in terms of recipe choice and turn around, and to further Gousto’s mission to reduce food waste as much as possible. This means better value on the horizon for customers — the price of one meal purchased through Gousto is cheaper than HelloFresh, for example — and better economics for the business itself.
Boldt made it clear that Gousto is in it to win it, and here to stay. He backed up his confidence with a potential 5-10 year road map, which features heavy investment in data science, its tech stack, and operational infrastructure, which is what he believes already gives it an edge over competitors. He further went on to explain that Gousto has a centralized data warehouse, with hundreds of real-time dashboards to help power its “amazing data science capabilities”.
These capabilities include forecasting models that help Gousto have less than 1 per cent food waste compared to the whopping 20 percent of the supermarkets, warehouse optimization in terms of the way ingredients are picked off the shelf, and the ability to design better menus.They plan to achieve the latter by determining the factors that make a successful menu by calculating a similarity between each recipe in Gousto’s library “without human input”. Boldt added,
As we are the leader in recipe choice, we also lead in data capture which means our menus self optimise over time, and we truly have a data advantage over the models that don’t capture info on customer preferences.
Without disclosing revenues, Gousto said that its turnover has grown by more than 200 per cent each year for the past three years and that it delivers nearly 100,000 meals each week to UK customers. Boldt said the underlying business was profitable but the company was “making an active decision to sacrifice some of the profitability to be able to grow” by investing in acquiring new customers.
The latest £10m of funding brings the total amount the start-up has raised to £28m since 2012. That compares with $250m for HelloFresh. Gousto is planning to expand in a market that Technomic, the US consumer research firm, has estimated is worth $1bn worldwide and could reach $10bn of revenues by 2020.