Food Tech Media Startup Funding, M&A and Partnerships: August 2013

From home cooking to the restaurant experience, technology-focused food startups are enhancing the way consumers engage with food. These startups are creating significant value for consumers and notable opportunities for restaurants and brands to better understand and provide value to their customers. As the food tech sector matures, we are seeing an increasing number of these companies being funded or acquired by industry players. This monthly column highlights the most interesting acquisitions, financings and partnerships within the Food Tech & Media ecosystem – digital content, social, local, mobile, e-commerce, payments, marketing and analytics – to give you insights into the latest funding and growth trends.

The summer continued to heat up on the fundraising front, as August was a surprisingly fruitful month for participants in the food tech & media space. Fifteen companies raised over $110m during the month, with a noticeable majority of the companies progressing beyond the Series A stage. There were also a number of high-profile deals among the established consumer internet companies, with Glam Media and GrubHub Seamless inching closer to IPOs, Groupon acquiring Plumfare and announcing major POS partnerships, Facebook and OpenTable teaming up, Yelp’s continued bolstering of its commerce platform, and GoDaddy’s new SMB service platform substantiated by its acquisition of Locu.

While catching up on reading over Labor Day, I read two articles that are especially relevant to entrepreneurs (and investors) in the hyperlocal B2C space, aka consumer-facing restaurant/bar/retail apps. Whether the business involves reviews, social networks, discovery, ordering, payments, delivery, gifting, loyalty or marketing, these articles should be required reading for newcomers, as they offer important lessons and perspectives from two struggling founders.

The first, written by UPlanMe co-founder Sean Barkulis is entitled “Why Your Consumer-Oriented Hyperlocal Startup Is Going to Fail.” It details the progression of the company’s business model, as well as the key flaws in his initial business plan (which are indeed common among companies in this space) – including “the app is going to need a massive local sales force to earn revenue.” The second article details the brutally, and refreshingly, honest chronicle of a mobile ordering startup, aptly entitled, “The Decline And Fall Of Flowtab, A Startup Story.” Co-founder Kyle Hill explains the team’s motivation for pure transparency, stating “the last two years have been a huge learning experience, and we believe the real failure would be not sharing our story with the world.” You’ll notice from the 200+ comments on the story that readers appreciated the candid perspective.

M&A

GoDaddy Acquires Locu. Building upon the partnership we discussed in June, the SF-based real-time, hyper-local database startup will bolster GoDaddy’s local business data distribution platform, advancing the web hosting company’s strategy “to deliver effortlessly beautiful digital identities that help small businesses get more customers.” GoDaddy said Locu will continue to operate out of their San Francisco and Cambridge offices and operate the brand independently (for now). Businesses have been paying approximately $25 per month for Locu’s services, thus it will be interesting to see if GoDaddy will continue to charge a similar fee, or incorporate it into a broader package – especially as GoDaddy begins a massive rebranding effort to establish itself as a worldwide platform for small businesses.

Announced: 8/19/13  Terms: $70m in cash and stock (plus earnouts)  Previous Investment: $4m Series A, $600k Seed, Institutional investors included: Quotidian Ventures, General Catalyst Partners, Lowercase Capital, Lightbank, SV Angel.  Founded: 2011

Groupon Acquires Plumfare. As Groupon continues to build out its restaurant-focused services, it acquired the SF-based mobile gifting/discovery platform, which encourages users to send photos of their restaurant meals to friends (via SMS, email, or Facebook) as a symbol of a gift. The company, which recently expanded its focus to include gift experiences for all types of local businesses, takes a cut of the transaction when the gift recipient redeems it. Rather than simply publicizing deals broadly to the public, Plumfare’s approach to local deals focuses on word of mouth (in the form of gifts) from existing customers. It appears the gifting platform will continue to operate as it is incorporated into the Groupon platform, but unclear whether it will continue to use the Plumfare brand.

Announced: 8/12/13  Terms: Not disclosed  Previous Investment: Angel Institutional investors included: Venrock, FF Angel.  Founded: January 2012

Zero Point Zero Productions Acquires Food Republic Inc. The award-winning New York-based production company (best known for producing Anthony Bourdain: No Reservations) acquired the “site for men who want to eat and drink well, and to live smart,” to anchor Zero Point Zero’s new digital content portfolio, which is expected to launch in 2014. The still-to-be-named entity will be comprised of food and lifestyle websites and content, and will also include several YouTube channels and web video series, plus Steven Rinella’s MeatEater website and a new partnership with cookbook author Isa Chandra Moskowitz.

Announced: 8/12/13  Terms: Not Disclosed  Previous Investment: Not Disclosed  Launched: May 2011

FUNDING

Belly Raises $12.1m. The Chicago-based customer loyalty and marketing platform for restaurants and retailers provides a technology platform with an in-store tablet, marketing materials and back-end support and analytics, as well as a software tool to integrate email, social media and mobile marketing campaigns. Consumers carry a universal Belly card, available in either physical form or on a mobile device that they can scan at a dedicated Belly iPad at locations within the merchant network. Interestingly, one of the investors in this round is a Belly client, 7-Eleven, which recently created a venture arm called 7-Ventures that is focused on new products and services in the food and beverage industry, as well as about emerging retail business models. According to the Chicago Tribune, with this investment the venture firm is particularly interested in learning “how the functioning and benefits of a loyalty network – one comprising multiple merchants – might differ from a loyalty program tailored to a specific retailer.” The company will use the first tranche of the Series B funding to add employees to its current staff, invest in its core products and expand in existing markets.

Announced: 8/28/13  Stage: Series B-1  Participating Institutional Investors: New Enterprise Associates, Andreessen Horowitz, DAG Ventures, Lightbank, Cisco and 7-Ventures, LLC (a subsidiary of 7-Eleven, Inc.)  Previous Investment: $10m Series B, $2.5m Series A, $375k Seed  Founded: August 2011

Naked Wines Raises $10m. The UK-based customer-funded online wine retailer (with operations in the U.S. and Australia) allows customers (aka “Angels”) to sponsor independent winemakers through a monthly contribution of $40, in return for 25% to 50% off a wine’s retail price and exclusive promotions. The platform allows members to learn more about (and taste wines from) the exclusively sourced independent vineyards, and in turn supports the vineyards through marketing, and funding towards grapes, barrels, bottles and more. The company will use the capital to accelerate growth within the U.S. and Australian markets.

Announced: 8/22/13  Stage: Series C  Participating Institutional Investors: WIV Wein International  Previous Investment: Approximately $29m  Founded: 2008

Gratafy Raises $1.45m. The Seattle-based social gifting platform allows app users to buy food and drink for friends remotely. Touted as more personalized than a general gift card, in that it requires users to purchase specific menu items from partner restaurants to send to friends, the startup is expanding its reach to Los Angeles with plans to roll out across the nation later this year. The latest cash infusion will be used for expansion into new markets, continued development of the “social gifting platform,” and growing the team.

Announced: 8/22/13  Stage: Seed Extension  Participating Institutional Investors:  Not Disclosed  Previous Investment: $1m Seed  Founded: 2011

Delectable Raises $2m. The San Francisco-based wine app and wine database released an updated version of its app in conjunction with the fund raise announcement, touting personalized wine recommendations based on user preferences as a new feature. In addition to the base use of the app, where users take a picture a wine label through the app and receive information about the wine along with community and expert reviews, the company has also added social community functionality.

Announced: 8/21/13  Stage: Angel  Participating Institutional Investors: Angels  Previous Investment: Not Disclosed  Founded: 2011

GrubHub Seamless Adds New Strategic Investor Through Secondary Sale. Following the announcement of the completed merger transaction, the online and mobile food ordering company announced that the Baltimore-based investment manager T. Rowe Price has acquired an ownership stake in the company by purchasing shares from early investors. It appears that the company did not receive any proceeds from the private placement; companies can use a private placement of shares to provide liquidity to early investors without going public. Financial terms of the transaction were not disclosed, nor were the identities of the investors who sold shares. The addition of T. Rowe Price to the investor roster is likely a signal that an IPO is on the horizon.

Announced: 8/20/13  Stage: Secondary Private Placement  Participating Institutional Investors: T. Rowe Price  Founded: 2013

Restorando Raises $13.3. The Buenos Aires-based startup was designed to bring the OpenTable reservation model to Latin America.  The company offers a free service for restaurant-goers, and unlike OpenTable, doesn’t require any hardware installation for the restaurants. According to TechCrunch, the services are now available in nine major cities in Brazil, Argentina, Chile and Colombia offers reservation tools to restaurants in Latin America. The company plans to use the new capital to partner with new restaurants where it is currently operating, and to expand across Latin America.

Announced: 8/16/13  Stage: Series B  Participating Institutional Investors: Flybridge Capital Partners, Emergence Capital Partners, Kaszek Ventures, Atomico, Storm Ventures  Previous Investment: $3.2m Series A  Founded: January 2011

Tastemade Raises $10m. The Santa Monica, CA-based food video startup aims to be a next generation Food Network. The company launched with a multichannel Youtube channel last year, and recently unveiled a handy iPhone app for users to create one-minute restaurant or cooking-focused videos. The app allows users to create their own episodes of a show, and walks users through instructions for how to film a compelling beginning, middle and end to their food story. The raise will help the company expand its reach and gain traction through other channels and devices, like AOL, Yahoo and Roku. The company also plans to use the new round of funding to continue to develop its food video Tastemade app.

Announced: 8/15/13  Stage: Series B  Participating Institutional Investors: Raine Venture Partners,  Redpoint Ventures  Previous Investment: $5.3m Series A, Undisclosed Amount from YouTube  Founded: 2012

Punchh Raises $3m. The Sunnyvale, CA-based provider of mobile solutions for the restaurant industry delivers branded mobile apps for games, gift cards, loyalty, online ordering, payments, referrals, surveys, and marketing campaigns. Styled as a mobile punch card, the Punchh app relies on location-based technology to list all nearby restaurants (even if the restaurants aren’t participating), and when a user chooses a participating location they open up a custom-branded page and digital punch card for that location. The app encourages word-of-mouth for restaurants by rewarding referrals and reviews with bonus “punches.” The use of proceeds will fund the growth of the company’s sales, product and customer success organizations.

Announced: 8/15/13  Stage: Venture  Participating Institutional Investors: Cervin Ventures (lead), Sandhill Group, Green Span Ventures, VKRM Ventures, Garnett Ventures  Previous Investment: $1m  Founded: 2010

Glam Media Raises $25m. The lifestyle-focused digital media company runs a network of (primarily) female-focused websites and blogs (including Foodie and Glam), and also has an advertising network that runs on its own properties as well as others. TechCrunch reports the funding serves as “a ‘top up round for Glam — in another words, some extra cash to keep the company going while it goes through the IPO process,” and Dan Primack of Fortune magazine reported that his sources said the funding happened several months ago, before Glam made a confidential filing for an IPO, although he think the IPO is more likely to occur in 2014.

Announced: 8/15/13  Stage: Series F  Participating Institutional Investors: Keating Capital, Hubert Burda Media  Previous Investment: $155m  Founded: September 2003

Blue Apron Raises $5m. The NY-based subscription dinner kit startup ships pre-measured ingredients and recipes for 2-6 meals weekly, with each serving priced at $9.99 (including shipping). The company will use the proceeds to expand to the West Coast, enabling it to ship to 80% of the country.

Announced: 8/15/13  Stage: Series B  Participating Institutional Investors: Bessemer Venture Partners, First Round Capital  Previous Investment: $3m Series A, $900k Seed  Founded: 2012

Drync Raises $900k. By taking a photo of a wine label, the Cambridge, MA-based wine discovery iOS app identifies and describes the wine, and by using a network of licensed retailers and wineries, users can purchase the wine to have it shipped directly through the app. The company earns money from wines sold on the app, receiving a flat fee from its partners – the promoted retailers. Wineries are not charged to be listed in the app, however Drync takes a “marketing fee” from each order. The use of proceeds will go towards further development of the app, as Drync plans to be able to recommend wines based on a user’s price and palate preferences.

Announced: 8/14/13  Stage: Angel  Participating Institutional Investors: Garvin Hill Capital Fund  Previous Investment: Not Disclosed  Founded: 2008

MyFitnessPal Raises $18m. The exercise and diet tracker app has built a loyal and active community since launching in 2005, and in turn has collected millions of data points on users’ diets and exercise regimes, including what they eat, whether they eat at home or restaurants, how often they exercise and the amount of weight that they lose. The new capital marks the first outside funding for the company and will be used for growing the team and pushing into the global marketplace, as it recently launched new versions in Spanish, French, German and Portugese to help drive business in Europe and South America.

Announced: 8/11/13  Stage: Series A  Participating Institutional Investors: Kleiner Perkins Caufield & Byers, Accel Partners  Previous Investment: Not Disclosed  Founded: 2005

Aisle50 Raises $2.6m. The Chicago-based daily deals company sells digital grocery offers through its Web and mobile platform, which can be redeemed at brick-and-mortar stores using a loyalty card or phone number.  The company didn’t disclose the specific use of proceeds.

Announced: 8/08/13  Stage: Series A  Participating Institutional Investors: Origin Ventures, August Capital, Plug & Play Ventures, Ron Conway, Yuri Milner  Previous Investment: $2.6 Seed  Founded: November 2010

Spotsetter Raises $1.3m. The San Francisco-based social map app and search engine platform combines location data from sources like Yelp and Zagat with user content across Facebook, Instagram, Twitter and Foursquare to help people discover and decide on new local places to go. The startup has built the social search engine on top of Google Maps and makes personalized recommendations for places to go. The team plans to begin development for Android and other platforms later this year.

Announced: 8/6/13  Stage: Seed  Participating Institutional Investors: Javelin Venture Partners, 2020 Ventures  Previous Investment: Not Disclosed  Founded: 2011

Clutch Raises $5.3m. The Philadelphia-based mobile commerce company built a platform that unites shopping, loyalty and gifting. The app delivers relevant offers to consumers and targeted customers back to the merchants. In differentiating itself from other mobile shopping companions and wallet apps TechCrunch notes, “rather than going after the younger demographic playing around with social product aggregators…, Clutch is more interested in the deal seeker – one who’s willing to share their personal shopping data with retailers in return for loyalty points and more targeted offers.” With the funding, the company plans to move from being a purely consumer-focused app to one that also serves the needs of local merchants through branded mobile applications.

Announced: 8/05/13  Stage: Series B  Participating Institutional Investors: Safeguard Scientifics, Ben Franklin Technology Partners of Southeastern Pennsylvania  Previous Investment: Venture Round  Founded: July 2012

CityMaps Raises $1.5m. The New York-based social map platform is reinventing the local map experience by allowing users to create and share their own maps of favorite places, discover nearby places to eat, drink and shop, receive personalized suggestions, and of course, get turn-by-turn directions. The company pulls map and business data from OpenStreetMap, Yext and others, so rather than a mashup of Google Maps, the team has built the full user experience and doesn’t rely on Google’s data. This funding is an extension of its earlier Series A, this time bringing in new investors. CityMaps has several upcoming features on the horizon, including a developer API, as well as features that could better connect local businesses to mobile consumers by alerting them to deals, promotions, nearby events, daily specials.

Announced: 8/1/13  Stage: Series A (extension)  Participating Institutional Investors: A-Grade Investments  Previous Investment: $2.5m Series A, $1m Angel  Founded: November 2010

PARTNERSHIPS

Facebook Partners with OpenTable to Allow Users to Reserve Tables at Restaurants Via a Facebook App. For each of the 20,000 OpenTable restaurants in North America, users who visit a restaurant’s Facebook page via the Facebook app can now book directly from the page without leaving to go to another app. As TechCrunch points out, the OpenTable partnership isn’t exclusive, thus this may signal that local bookings and commerce may be the next step for Facebook. This could all been seen as competitive to the new Yelp Platform, as Yelp has also been moving this direction with its recent SeatMe acquisition and local commerce partnerships, and is all the more interesting given the news that Facebook is also reportedly working on PayPal-like mobile payments system.

Groupon Partners with Verifone and Ingenico Terminals For Breadcrumb Mobile Payment Processing. In partnering with two of the biggest producers of payment terminals used at the point of sale – Groupon’s first integration with credit card terminals – merchants can now use these terminals to process card payments through Breadcrumb’s payment service, expanding the options beyond dongles attached to their iOS or Android smartphones and tablets. This is an effort to widen the customer base beyond those merchants who previously never accepted credit cards. The partnership is aimed to reach the group of merchants that already accept credit card payments but haven’t yet had exposure to the new type of integrated POS services that provide analytics, loyalty,etc. Furthermore, TechCrunch explains, “the attractor here is not embracing (and paying) for new technology but getting those users on board with the promise of lower fees using the same stuff they’d always used.”

Yelp and ReachLocal Form Exclusive Partnership to Enable Users to Book Home Services Directly on Yelp. The partnership will allow users to process book appointments with service providers, which use the ReachCommerce software, without leaving the Yelp app or site. ReachCommerce, which is scheduled to roll out nationally by the end of the year, allows business operators to build and manage schedules, assign and track technicians, communicate with customers, generate estimates and invoices, process payments, and provide business intelligence and reporting. Yelp’s strategy to work through partners to bring commerce functionality to its properties – versus building it internally – has brought dramatically increased relevance to the platform, and as Street Fight Magazine declares, this “has undoubtedly hurt the prospects for [competing] consumer commerce brands.” In other Yelp news, a long overdue feature has been added to their new iOS app: users may now post Yelp reviews straight from their mobile phone.

INDUSTRY LANDSCAPE

As The Food Tech & Media ecosystem continues to see rapid change, we created The Food Tech & Media Industry Map  to help entrepreneurs, participants and investors understand this quickly evolving landscape.

Let us know about your recent or upcoming funding, partnerships or acquisitions here.

Check out last month’s round-up here.

Would you be interested in a round-up of agriculture-related funding, partnerships and acquisitions? Let us know in the comments below.