If we needed any more proof that the age of food commerce startups is upon us, Hampton Creek Foods’ recently announced $23 million Series B is it.
Hampton Creek makes an “eggless egg” product for vegans, people who want to cut down on their carbon footprint, or just regular old cookie dough lovers who are tired of worrying about dying of salmonella.
It’s part of a trend of venture backed startups that aren’t just content to serve as dining marketplaces or reservation systems. They actually want to provide the food for people, whether making it, cooking it or procuring it.
Hampton Creek is one of the first such companies to move beyond the seed and series A rounds and start heading for serious scale. Its $23 million Series B is one of the bigger — if not biggest — rounds in the recent food production craze. In comparison, ingredient recipe company Blue Apron raised a $5 million Series B.
In the past year, as Pando has reported, entrepreneurs have increasingly targeted the food provision sector. There are meal make-and-delivery companies like SpoonRocket (which just expanded to SF), Munchery, Sprig, and Chefler. There are companies like Blue Apron and Plated that send weekly boxes of measured ingredients and recipes so busy people can teach themselves how to cook without actually grocery shopping. Then there are businesses that are reinventing their own foods, like Beyond Meat, the infamous Soylent shake, and Hampton Creek’s eggless egg.
There’s no question that the market for food production is huge — everyone has to eat. But there’s a reason startups haven’t disrupted said market before, choosing instead to focus on technology based products in the food industry like restaurant reviews or loyalty programs. The challenges of scaling a food production company are a whole different beast to scaling a software company.
Just consider the operational complexity: Shipment centers, food spoiling risks, delivery personnel, recipe creation, food production. If you get more users you can’t just purchase more server space. You have to procure more product at every stage of the process: food from farms (or your labs, in the case of Hampton Creek), boxes for shipping, more employees to package the food.
Matching supply and demand would be a challenging, teetering balancing act, particularly for a high growth startup that sees a lot of change in demand week over week.
There have already been some less-than-reassuring moments in startup foods (Rats in Soylent) and some companies — like Pop-Up Pantry — have gone out of business. Others, though — like Plated — claim incredible margins and growth of fifty percent month over month.
Money isn’t everything, but the general trend upwards shows that investors are getting more and more comfortable taking a risk on disruption you can eat.
[Illustration by Hallie Bateman]