Today, one of the companies that is supplying produce and other items both to consumers and other services that are in turn selling food and groceries to them, is announcing a new round of funding as it gears up to take its next step, an IPO.
GrubMarket, which provides a B2C platform for consumers to order produce and other food and home items for delivery, and a B2B service where it supplies grocery stores, meal-kit companies and other food tech startups with products that they resell, is today announcing that it has raised $60 million in a Series D round of funding.
Sources close to the company confirmed to TechCrunch that GrubMarket — which is profitable, and originally hadn’t planned to raise more than $20 million — is now valued at around $500 million.
The funding is coming from funds and accounts managed by BlackRock, Reimagined Ventures, Trinity Capital Investment, Celtic House Venture Partners, Marubeni Ventures, Sixty Degree Capital, Mojo Partners alongside with previous investors GGV Capital, WI Harper Group, Digital Garage, CentreGold Capital , Scrum Ventures, and other unnamed participants. Past investors also included Y Combinator, where GrubMarket was part of the Winter 2015 cohort), and for some more context, GrubMarket last raised money in April 2019, $28 million at a $255 million valuation.
Mike Xu, the founder and CEO, said that the plan remains for the company to go public (he’s talked about it before) but given that it’s not having trouble raising from private markets and is currently growing at 100% over last year, and the IPO market is less certain at the moment, he declined to put an exact timeline on when this might actually happen, although he was clear that this is where his focus is in the near future.
“The only success criteria of my startup career is whether GrubMarket can eventually make $100 billion of annual sales,” he said to me over both email and in a phone conversation. “To achieve this goal, I am willing to stay heads-down and hardworking every day until it is done, and it does not matter whether it will take me 15 years or 50 years.”
I don’t doubt that he means it. I’ll note that we had this call in the middle of the night his time in California, even after I asked multiple times if there wasn’t a more reasonable hour in the daytime for him to talk. (He insisted that he got his best work done at 4.30am, a result of how a lot of the grocery business works.) Xu on the one hand is very gentle with a calm demeanor, but don’t let his quiet manner fool you. He also is focused and relentless in his work ethic.
When people talk today about buying food, alongside traditional grocery stores and other physical food markets, they increasingly talk about grocery delivery companies, restaurant delivery platforms, meal kit services and more that make or provide food to people by way of apps. GrubMarket has built itself as a profitable but quiet giant that underpins the fuel that helps companies in all of these categories by becoming one of the critical companies building bridges between food producers and those that interact with customers.
Its opportunity comes in the form of disruption and a gap in the market. Food production is not unlike shipping and other older, non-tech industries, with a lot of transactions couched in legacy processes: GrubMarket has built software that connects up the different segments of the food supply chain in a faster and more efficient way, and then provides the logistics to help it run.
To be sure, it’s an area that would have evolved regardless of the world health situation, but the rise and growth of the coronavirus has definitely “helped” GrubMarket not just by creating more demand for delivered food, but by providing a way for those in the food supply chain to interact with less contact and more tech-fueled efficiency.
Sales of WholesaleWare, as the platform is called, Xu said, have seen more than 800% growth over the last year, now managing “several hundreds of millions of dollars of food wholesale activities” annually.
Underpinning its tech is the sheer size of the operation: economies of scale in action. The company is active in the San Francisco Bay Area, Los Angeles, San Diego, Seattle, Texas, Michigan, Boston and New York (and many places in between) and says that it currently operates some 21 warehouses nationwide. Xu describes GrubMarket as a “major food provider” in the Bay Area and the rest of California, with (as one example) more than 5 million pounds of frozen meat in its east San Francisco Bay warehouse.
Its customers include more than 500 grocery stores, 8,000 restaurants, and 2,000 corporate offices, with familiar names like Whole Foods, Kroger, Albertson, Safeway, Sprouts Farmers Market, Raley’s Market, 99 Ranch Market, Blue Apron, Hello Fresh, Fresh Direct, Imperfect Foods, Misfit Market, Sun Basket and GoodEggs, all on the list, with GrubMarket supplying them items that they resell directly, or use in creating their own products (like meal kits).
While much of GrubHub’s growth has been — like a lot of its produce — organic, its profitability has helped it also grow inorganically. It has made some 15 acquisitions in the last two years, including Boston Organics and EJ Food Distributor this year.
It’s not to say that GrubMarket has not had growing pains. The company, Xu said, was like many others in the food delivery business “overwhelmed” at the start of the pandemic in March and April of this year. “We had to limit our daily delivery volume in some regions, and put new customers on waiting lists.” Even so, the B2C business grew between 300% and 500% depending on the market. Xu said things calmed down by May and even as some B2B customers never came back after cities were locked down, as a category B2B has largely recovered, he said.
Interestingly, the startup itself has taken a very proactive approach in order to limit its own workers’ and customers’ exposure to Covid-19, doing as much testing as it could — tests have been, as we all know, in very short supply — as well as a lot of social distancing and cleaning operations.
“There have been no mandates about masks, but we supplied them extensively,” he said.
So far it seems to have worked. Xu said the company has only found “a couple of employees” that were positive this year. In one case in April, a case was found not through a test (which it didn’t have, this happened in Michigan) but through a routine check and finding an employee showing symptoms, and its response was swift: the facilities were locked down for two weeks and sanitized, despite this happening in one of the busiest months in the history of the company (and the food supply sector overall).
That’s notable leadership at a time when it feels like a lot of leaders have failed us, which only helps to bolster the company’s strong growth.
“Having a proven track record of sustained hypergrowth and net income profitability, GrubMarket stands out as an extraordinarily rare Silicon Valley startup in the food technology and ecommerce segment,” said Jay Chen, managing partner of Celtic House Venture Partner. “Scaling over 15x in 4 years, GrubMarket’s creativity and capital efficiency is unmatched by anyone else in this space. Mike’s team has done an incredible job growing the company thoughtfully and sustainably. We are proud to be a partner in the company’s rapid nationwide expansion and excited by the strong momentum of WholesaleWare, their SaaS suite, which is the best we have seen in space.”
This week, we’re looking at a number of topics because a lot went down. Coinbase CEO Brian Armstrong took a controversial stance on social, Clubhouse found itself under scrutiny again, but this time around anti-Semitism and a new site launched that sheds light on some of the negative experiences of underrepresented people in tech. Meanwhile, the founder from Ethel’s Club unveiled Somewhere Good, which aims to provide a safe social platform for people of color. The timing couldn’t be better.
Human Capital launches as a newsletter on Friday, October 23. Be sure to sign up here to get it sent straight to your inbox.
Coinbase CEO’s stance on societal issues stirs up controversy
Over the weekend, Coinbase CEO Brian Armstrong said the company does not engage on border societal issues when they are not related to its core mission. On political causes, Armstrong said Coinbase also does not advocate for any causes or candidates that are not related to its mission “because it is a distraction from our mission.” In that Medium post, Armstrong recognized that some employees may disagree and even resign.
A couple of days later, Armstrong began offering employees who don’t feel comfortable with the direction of the company a severance package, The Block Crypto reported.
“It’s always sad when we see teammates go, but it can also be what is best for them and the company,” Armstrong wrote in an internal memo. “As I said in my blog post, life is too short to work a company that you aren’t excited about.”
It’s quite a statement to make just weeks away from a very important presidential election. But Armstrong’s justification seems to be that he doesn’t want the internal strife that has happened at companies like Google and Facebook to happen at Coinbase.
Obviously, people have feelings and thoughts about Armstrong’s stance. One on side, there’s Y Combinator Founder Paul Graham saying Coinbase will push away the “aggressively conventional-minded” people but that those types of people “tend not to be good at building things anyway.”
And on another side, there’s Twitter CEO Jack Dorsey pointing out how Armstrong’s stance leaves people behind.
Then, there’s also confusion around how Armstrong could say that Black lives matter in June and then go on to say that workers essentially need to leave their politics and beliefs that don’t relate to work at home. Well, GitHub Director of Engineering Erica Baker tweeted that someone probably forced Armstrong’s hand into speaking out about Black lives.
The latest Clubhouse drama
The invitation-only audio social app was home to a discussion titled, “Anti-Semitism and Black Culture” this week. During the discussion, someone reportedly said Black and Jewish communities differ because of their relationship to economic advancement, Bloomberg reported. In response, another person reportedly said, “The Jewish community does business with their enemies; the Black community is enslaved by their enemies” — to which some people pushed back, saying it perpetuates a harmful stereotype about Jewish people.
Ethel’s Club founder teases Somewhere Good, a digital space that centers people of color
Amid private social app Clubhouse finding itself again under heavy scrutiny, there perhaps is no better time for the emergence of a platform that provides a safe space for people of color.
Naj Austin, founder and CEO of subscription-based physical and digital community Ethel’s Club, is building Somewhere Good to be a one-stop shop for people of color. Beyond being a place for people of color to connect, it’s also about creating a safe space for folks to be their authentic selves.
“A lot of how we’re talking about Somewhere Good with investors is this idea of a new online world where our identities are centered,” Austin told me. “The vision for Somewhere Good is you take your phone out of your pocket and, as a Black person or person of color, all of your needs are met there in that one place.”
Greylock teams up with Management Leadership for Tomorrow to diversify tech’s wealth cycle
Greylock is one of a number of VC firms that have kicked into action following the police killings of George Floyd, Breonna Taylor and other unarmed Black people and people of color. The multi-pronged partnership will enable Greylock to tap into MLT’s network of around 8,000 Black, Latinx and Indigenous professionals and connect them with potential roles at the firm’s portfolio companies. Additionally, Greylock and MLT will work together to support retention at those companies, as well as help MLT professionals pursue careers in venture capital.
“And look, VCs and tech startups — we just have to be honest that we’ve been really bad at getting this right,” Greylock Partner David Sze told TechCrunch. “Historically, I mean, we’ve let the system sort of evolve without much top down oversight in regards of diversity and inclusion and we just really need to change that.”
Twitter releases latest diversity report
Twitter’s most recent diversity report showed that the company has done an okay job of increasing representation of Black employees at its company since 2017. In 2017, Twitter was just 3.4% Black and in August 2020, Twitter was 6.3% Black.
By 2025, Twitter aims for at least 25% of its workforce to be underrepresented minorities, and at least 10% of that overall 25% to be Black. Overall, Twitter is 41.4% white, 28.4% Asian, 5.2% Latinx, 3.7% multi-racial and less than 1% Indigenous.
Twitter’s technical team is also mostly white (41.4%) so perhaps it’s no wonder why Twitter has had some algorithmic bias issues.
DiscoTech highlights diversity issues in tech
A new site popped up that details the discrimination people experience in tech. The folks behind DiscoTech describe themselves as “a diverse group of cross-tech organizers who are committed to ending discrimination in the workplace.”
The posted experiences — all anonymous — describe sexism, racism, ageism, sexual harassment and assault, weight discrimination, suicide and mental illness. Here are a few stories that jumped out:
After introducing myself to a peer at a social gathering, I was asked if I had ‘come to Microsoft to find a husband?’ The blatant question left me speechless, and I was shocked by his total disregard for my professional aspirations. My friend overheard and she quickly asked if he would pose the same question to a man, asking if he’d ‘come to Microsoft to find a partner?’ He got defensive and denied his originally offensive inquiry.
This event happened prior to my joining the team, but I didn’t find out about it until years later. The hiring manager bragged openly about how ‘little’ she hired me for while I was desperately leaving a toxic work environment. I pushed back, she was persistent and being afraid of losing the offer I took it. I ended up leaving the position for a job that paid market value. Irony.
I’m not sure where to begin with the amount of discomfort I’ve experienced in the work place. As a Black, woman in tech I’m all too familiar with being an extreme minority. I guess you could say my discomfort began at the beginning of my professional career. I accepted a position at my company in a 6 month training program for recent college graduates. Upon arrival at orientation I realized I was the only Black woman out of 70 participants. 70 other co-workers and I was the only one. I felt completely alone and as if I had no one who could relate to my unique experience. From there, it was small incident after small incident that caused my discomfort to grow. From my technical trainer referring to me as Sheba, as in the Queen of Sheba, in the middle of a training session to my colleagues constantly questioning my intelligence, work became a stressful environment. It didn’t help that when I tried to reach out throughout the company for assistance with existing in the workplace, I was often told to keep to myself and try my best to ‘fit in.’ It took me a while to find a support system but I’m glad I finally did because the amount of microaggressions I face on daily basis is often overwhelming.
Shipt shoppers protest new pay model
Shipt shoppers are organizing a handful of actions in protest of Shipt’s new pay structure that began rolling out this month. The first action is happening from Saturday, Oct. 17 through Oct. 19, when workers are calling on their fellow Shipt shoppers to walk out and boycott the company. Organizers are asking for shoppers not to schedule any hours or accept any orders during that time.
“Our goal is to draw attention to the fact that this pay scale really does affect shoppers and regardless of Shipt’s position of it taking into account effort and benefitting shoppers, we are finding it is the opposite on both fronts,” Willy Solis, a Shipt shopper in Dallas and lead organizer at Gig Workers Collective, told TechCrunch. “It’s not holding up to the true reality. We are getting paid less for more effort.”
Spin workers ratify first union contract
A group of 40 workers at Ford-owned Spin ratified their first union contract with Teamsters Local 665 this week. The group of workers consists of shift leads, maintenance specialists, operations specialists, community ambassadors, and scooter deployers and collectors.
“This new contract gives us job security and immediate money up front, with guaranteed increases each year going forward. We also got holiday pay and vacation, which we didn’t have before we organized,” Spin worker Shamar Bell said in a statement. “All this means a lot during the pandemic. We know our union will have our back if our boss or the city government tries to make changes. I can say for sure, we’re proud to be Teamsters.”
As part of the three-year agreement, Spin workers will get annual pay raises of more than 3% each year, six paid holidays (compared to zero holidays), vacation days based on years of employment (compared to no vacation days), five sick days a year, a $1,200 per employee ratification bonus, benefits accrual for part-time workers and other benefits.
In Other News
By the way, TechCrunch Sessions: Mobility is coming up next week. Since you made it to the end of this, here’s a 50% off code for you to get full access to the event. This code will get you into the expo and breakout sessions for free.
“Gradually, then suddenly.” Hemingway’s words succinctly capture the recent history of tech in Latin America. After more than a decade of gradual progress made through fits and starts, tech in Latin America finally hit its stride and has been growing at an accelerating pace in recent years.
The region now boasts 17 unicorns up from zero just three years ago. For the first time, the most valuable company in the region isn’t a state-controlled oil or mining behemoth, but rather e-commerce platform MercadoLibre.
We are only in the first chapter of this long story, however. When we compare the penetration of tech companies in Latin America to both developed and developing markets, we estimate that the market could grow nearly tenfold over the next decade. The value to be unlocked will be measured in trillions of dollars and the lives improved in the hundreds of millions.
Our venture capital fund, Atlantico, conducts a thorough annual analysis of market data from Latin America in what we call the Latin America Digital Transformation Report. The report consists of hundreds of data-rich slides based off of original studies, surveys and models constructed from a combination of public and proprietary data shared by many of the region’s leading tech companies. This year, for the first time, we have decided to make the report public and here we highlight some of the findings from this year.
Global venture capitalists, the likes of Sequoia, Benchmark and a16z have planted their flags through key investments in companies like Nubank, Wildlife and Loft. Those are not isolated incidents – venture capital investments in the region have nearly doubled annually for the last three years according to the Latin American Venture Capital Association (LAVCA). In order to understand what investors are seeing in the region, we analyzed the market through a simple framework we apply throughout our report.
The starting point for this framework is the socioeconomic foundation in place. The context in which transformation occurs is important in shaping its possible outcome. The same ingredients applied in different contexts and time periods will produce very different results. Thus, we believe that Latin America is unique globally, and the types of companies that will flourish (and to what extent) will be different than in other parts of the world. Trying to shoehorn foreign business models and products is unlikely to yield good results.
In the case of Latin America, it’s key to remember the region boasts a population twice that of the United States and a GDP half that of China’s (but similar on a per capita basis). In short: Latin America is big, a central factor that has the power to attract capital and talent. However, also critical to note is that economic inequality is severe. While a quarter of the region’s population lives in poverty, the wealthy in Mexico City and São Paulo enjoy living standards in line with their peers in New York and London.
This unique mix of large opportunity and critical problems waiting to be solved has provided fertile ground for the gig economy to flourish. Case-in-point: Brazil is Uber’s largest market globally in volume of rides, with São Paulo its largest city. Rappi, a major food delivery player in the region, valued at over $3 billion, grew its sales by 113% over the first five months of the pandemic. When taken together, the largest ride-hailing and food-delivery services in Brazil are already the largest private employer in Brazil, a formidable contribution to reducing high unemployment.
When we track technology company value as a percent of the economy (tech company market cap as a % of GDP) we clearly see that Latin America, at 2.2% penetration, has a ways to go. Our estimate is that it is 10 years behind China (at 27% penetration), which itself is five years behind current U.S. levels (39% penetration).
However, it is important to note that Latin America is making up for lost time. This metric for tech company penetration or share has been growing on average at 65% per year since 2003. In comparison, the growth in U.S. tech company penetration has grown at 11% annually in the same period, while China’s has expanded at 40%.
Drivers of digital transformation
Within the socioeconomic context of the region, we advance to looking at the three drivers of change in our framework: people, capital and regulation.
On the people front, the greater visibility of successful role models has catalyzed a desire to follow entrepreneurial footsteps. People like Mike Krieger (co-founder of Instagram), Marcos Galperin (founder/CEO of Mercado Libre) and Henrique Dubugras (founder/co-CEO of Brex) have shown that local talent can go on to build global companies.
In a survey we conducted with nearly 1,700 college students from the top universities in Brazil, 26% of students voiced a desire to work at startups or big tech companies. A whopping 39% expressed plans to start a company in the future, that number rising to 60% when we consider only computer science students. As more and more of the region’s top graduates flock to tech, it gives us confidence in the accelerating growth of the sector over many years to come.
On the capital front, the growth of venture funding in the region has been frequently written about. Last year, it hit a peak of $4.6 billion after doubling from the year before. However, what perhaps is more surprising is that despite this rapid growth, we are still far from the ceiling. When we view venture capital investments as a proportion of GDP, we see Latin America as only one-seventh of the U.S. level and a quarter of the level in India.
Dozens of top startups and firms in India are working to form an alliance and toying with the idea of launching an app store to cut their reliance on Google, five people familiar with the matter told TechCrunch.
The list of about 150 entrepreneurs includes high-profile names, such as Vijay Shekhar Sharma, co-founder and chief executive of Paytm (India’s most valuable startup), Deep Kalra of travel ticketing firm MakeMyTrip, and executives from PolicyBazaar, RazorPay, and Sharechat.
The growing list of founders expressed deep concerns about Google’s “monopolistic” hold on India, home to one of the world’s largest startup ecosystems, and discussed what they alleged was unfair and inconsistent enforcement of Play Store’s guidelines in the country.
Their effort comes days after a small group of firms including Epic Games, Spotify, Basecamp, Match Group, ProtonMail forged their own coalition to pressure Apple and Google to make changes to their marketplace rules.
The conversations in India, which began in recent weeks, escalated on Tuesday after Google said that starting next year developers with an app on Google Play Store must give the company a cut of as much as 30% of several app-related payments.
Dozens of executives “from nearly every top startup and firm” in India attended a call on Tuesday to discuss the way forward, some of the people said, requesting anonymity. A 30% cut to Google is simply unfeasible, people on the call unanimously agreed.
Vishal Gondal, the founder of fitness startup GOQii, confirmed the talks to TechCrunch and said that an alternative app store would immensely help the Indian app ecosystem.
TechCrunch reached out to Paytm on Monday for comment and the startup declined the request. Hundreds of other startups in India have expressed interest to join the effort, people said.
In recent months, several major startups in India have also expressed disappointment over several of the existing industry bodies, which some say have failed to work on nurturing the local ecosystem.
The tension between some firms and Google became more public than ever late last month after the Android-maker reiterated Play Store’s gambling policy, sending a shockwave to scores of startups in the country that were hoping to cash in on the ongoing season of Indian Premier League cricket tournament.
Google temporarily pulled Paytm’s marquee app from the Play Store citing repeat violation of its Play Store policies. Disappointed by Google’s move, Paytm’s Sharma said in a TV interview, “This is the problem of India’s app ecosystem. So many founders have reached out to us… if we believe this country can build digital business, we must know that it is at somebody else’s hand to bless that business and not this country’s rules and regulations.”
Google has sent notices to several firms in India including Hotstar, TechCrunch reported last month. Indian newspaper Economic Times reported on Wednesday that the Mountain View giant had also sent warnings to food delivery startups Swiggy and Zomato.
Vivek Wadhwa, a Distinguished Fellow at Harvard Law School’s Labor and Worklife Program, lauded the banding of Indian entrepreneurs and likened Silicon Valley giants’ hold on India to the rising days of East India Company, which pillaged India. “Modern day tech companies pose a similar risk,” he told TechCrunch.
Some of the participating members are also hopeful that the government, which has urged the citizens in India to become self-reliant to revive the declining economy, would help their movement.
Other than its reach on Android, Google today also leads the mobile payments market in India, TechCrunch reported earlier this year.
The giant, which has backed a handful of startups in India and is a member of several Indian industry bodies, invested $4.5 billion in Mukesh Ambani’s telecom giant Jio Platforms earlier this year.
Ambani, who runs oil-to-retails giant Reliance Industries and is India’s richest man, is an ally of Indian Prime Minister Narendra Modi. Jio Platforms has attracted over $20 billion in investment from Google, Facebook, and 11 other high-profile investors this year.
The voluminous investment in Jio Platforms has puzzled many industry executives. “I see no business case for Facebook investing in Jio beyond saying we need regulatory help,” said Miten Sampat, a high-profile angel-investor on a podcast published Wednesday.
Google said in July that it would work with Jio Platforms on low-cost Android smartphones. Jio Platforms is planning to launch as many as 200 million smartphones in the next three years, according to a pitch the telecom giant has made to several developers. Bloomberg first reported about Jio Platform’s smartphone production plans.
These smartphones, as is the case with nearly 40 million of its feature phones in circulation today, will have an app store with only a few dozen apps, all vetted and approved by Jio, according to one developer who was pitched by Jio Platforms. An industry executive described Jio’s store as a walled-garden.
A possible viable option for startup founders is Indus OS, a Samsung-backed third-party store, which last month said it reaches over 100 million monthly active users. As of earlier this week, Paytm and other firms had not reached out to IndusOS, a person familiar with the matter said.