The oversubscribed round was led by Piper Jaffray, included all ($6m) Series A major investors, and some new.
CEO Ben Cattoor speaks to that milestone and other facets of where this business is heading next:
Why the decision to raise more investment and how did you settle on $15m?
Delivery is a fast growth space and our investors see a tremendous opportunity. Which was why they sought us out for our Series B funding. From our perspective, the Series B investment equates to accelerated growth. The specific amount of the investment stems from what we believe is needed to grow at the right rate.
How do you breakdown the application of funding by area of spending/investment?
Due to that nature of our business model (being a marketplace), the primary use of the investment will focus on talent acquisition within Sales, Product Engineering and Operations. In addition, we also intend to increase our marketing spend in ways we haven’t in the past.
All the original investors ‘re-upping’ is a good sign; what’s the significance of Piper leading this round? Did you find them or vice-versa?
We were introduced to the leadership team at Piper Jaffray several months ago through one of our board members. After several months of conversations and getting to know each other (we hit it off), Piper Jaffary presented a partnership situation and term sheet that we believed aligned very well with our business vision, objectives and overall culture fit.
Who is on the board of directors now at Foodsby?
Ben Cattoor, Phil Soran (existing), Brian Bispala (existing), Bo Peabody (existing), Jeff Hinck (new), Ted Christianson (new)
As the leader, what is your vision for the company?
The opportunity within food delivery is massive – especially in specific geographic areas like the suburbs, where most of the US population live and/or work. However, other delivery businesses are trying to solve the problem by putting a middle man in between the consumer and the vendor. These businesses have shown an inability to sustain on their own, hence why so many are ancillary business units of already successful companies or need to take on unprecedented amount of investment.
Foodsby is uniquely different from all other delivery businesses. We’re a sustainable delivery model where restaurant seeks Foodsby out because we allow them to be profitable in the delivery space. Our goal is to create a sustainable delivery marketplace where everyone wins, even, and especially outside of city centers.
What does total corporate capitalization call for to reach the ultimate vision?
Time will tell. From our viewpoint, capital isn’t necessary to sustain the business. But rather, it will help better position Foodsby and provide the opportunity to accelerate growth. To achieve our ultimate vision, future capital is always a healthy part of that conversation, but not at the center of it.
What 5-10 new markets are you targeting next?
We will be adding the St. Louis and Tampa Bay markets by end of 2018. In 2019, Foodsby intends to expand to an additional 10 markets (at a minimum), with more of a focus on larger markets.
What does your tech stack look like?
In the last year, we’ve made huge strides in our tech stack. We’ve transitioned from a single application to a more defined micro-service approach. This has expanded our tech stack and allowed us to scale our services, as well as significantly improve our development speed. With that said, we leverage a combination of .NET, Java, React, etc. and host on AWS.
Foodsby Is Hiring: iOS Engineer + Android Engineer
What are some unique internal KPIs you track on the regular that validate the demand for Foodsby’s service?
The Foodsby business is built around the Buildings, vs. One to One Consumer. As a result, we focus on orders per day / per building, as well as order per delivery / per restaurant. If restaurants don’t achieve a desired order level, they will choose to deliver less often, thereby giving consumers less options. Our model requires “optimized” volume for all parties. Meaning, restaurant need enough orders, but not too many and buildings need enough restaurants but not too many.
Do you have intentions of doing any acquisitions of other companies near or far?
We aren’t actively focused on acquisitions. However, it’s not out of the realm of possibility if the right opportunity presents itself and can help us achieve our long-term vision and objectives.
Exit is expected with the type of VC you’ve taken; who are some hypothetical buyers of Foodsby -or- what spaces might that stem from?
Foodsby is a mix of ecommerce, food delivery and corporate food service space. With our ultimate vision, I would imagine we would expand that potential. I was given a piece of advice several years ago that I fully agree with, “Don’t start a company without the intention of taking it public.” However, that doesn’t mean you don’t listen to offers along the way.
What is the biggest challenge or question mark you see looking ahead in the next 12 months?
Business success and sustainable growth always comes down to three key factors: People, Process and Product. Therefore, our challenge (and opportunity) will always be focus on adding right people at the right time to help build our process and product.
Is there anything else you would like to add?
Our success over the last six years has been attributed to the passion and hard work of our team members. I am extremely proud and grateful to be working along such dedicated professionals. As we continue to accelerate our growth, I expect our local team in the Mpls/St. Paul metro area to grow by 3X (from 50 to 150) over the next few years.