Amazon backs Indian meat startup FreshToHome in $104 million funding
Indian startup FreshToHome, which sells fresh fish and meat to consumers in the South Asian market and the Middle East region, has courted a new backer: Amazon.
Amazon, through its India-focused Smbhav Venture Fund, has led a $104 million Series D financing round in the Bengaluru-headquartered startup, the two companies said Tuesday. The new round for the startup, which also counts the development arm of the American government among its backers, also saw participation from the government of Dubai and Iron Pillar.
This is the largest check that the $250 million Smbhav Venture Fund has written so far. The new round takes FreshToHome's all-time raise to over $250 million.
Started in 2015, FreshToHome is one of the largest players battling for a slice of the $100 billion Indian fish and meat market. Most Indians are not vegetarians, but the current market is run on an age-old system.
FreshToHome is bringing efficiency to the market by streamlining the sourcing infrastructure of meat and fish and improving the quality of the produce and their delivery time by using its own rigorous processing plants and vast supply chain network.
A customer ordering fish from Delhi to Dubai on a Monday gets their item, which was procured on Monday morning, delivered by Tuesday, for instance.
But for FreshToHome, and a handful of other startups vying for the same $100 billion Indian meat market, one of the biggest challenges is establishing trust with the customers. The wet market commands the lion's share in all meat and fish sale in India, offering customers the ability to inspect each item before reaching for their wallet.
Shan Kadavil, co-founder and chief executive of FreshToHome, told TechCrunch in an interview that it took the startup about seven years to establish the competitive moat that it has today.
“My co-founder is a fish exporter. He has operated in this space for more than 30 years. It’s a very difficult grassroots level change that you have to enact. This business is not just about technology, but also people and relationships,” said Kadavil, who before founding FreshToHome managed tech support for Support, and India operations for gaming firm Zynga.
One such trust factor is convincing the fishermen and fisherwomen and poultry farmers to do away with cash. The second competitive moat is unit economics. Kadavil said the startup is operationally profitable and “proficorn.” (Proficorn, obviously, is the culmination of soonicorn and profitability. Kadavil declined to disclose the startup’s valuation in the current round.
FreshToHome today serves over 4,000 fishers and farmers and millions of customers in over 160 cities in India and the UAE and offers more than 2,000 certified fresh and chemical-free products. The startup has expanded its presence by over 100% in the past one year, he said.
FreshToHome, which sells the vast majority of its products online today, including through Amazon, is also increasingly expanding its physical presence. The startup operates a dozen brick-and-mortar stores, but these are not new properties it’s leasing but partial refashioning of its existing warehouses and plants, Kadavil said, adding that the startup will open up more such stores in the coming months as it doubles down on an omni-channel bet.
Amazon has expanded to grocery and fresh categories in India in recent years as it supercharges its logistics infrastructure in the South Asian market. But in recent months, the American giant has retreated from many business lines in the country as it reels from the global market conditions.
An investment in FreshToHome could be Amazon's way to concede the meat and fish market to the startup for the time being. Kadavil insisted that the investment from Amazon is purely financial in nature and not strategic, per se.
“Our vision with the $250 million Amazon Smbhav Venture Fund is to empower the next generation of innovative, technology enabled companies led by visionary founders," said a spokesperson of Amazon Smbhav Venture Fund, in a statement.
"We are impressed with the FreshToHome management team led by Shan Kadavil and they have done some quality work in creating a robust technology enabled supply chain and scalable backward integrated capabilities to serve both customers as well as farmers and fishers. We are excited to partner with FreshToHome for the next phase of its growth."