Yumist, a VCs-backed foodtech startup that offered home-style meals to Indian customers, has wounded up operations, as it failed to raise follow-on funding and also due to “a bunch of internal and external factors”.
“…we are shutting shop today. We failed to raise the kind of capital that this business required while staying true to the customer problem. In hindsight, there’s a bunch of internal and external factors that led us to this dead end,” the startup wrote in a blog post on its website.
“From launching in a second city prematurely, or committing to a high growth, high burn model just because prospective investors wanted to see that back in 2015, or taking a tad bit too long to find the right business model, we made our mistakes. We learnt from these mistakes and recovered fast, but maybe not too fast,” the startup mentioned in the post.
Yumist was founded in November 2014 by Alok Jain, a technology entrepreneur, and Abhimanyu Maheshwari, a seasoned F&B entrepreneur. It served home-style meals prepped in its own kitchens at price points of around INR 65 (US$1). The firm operated in Gurgaon, Delhi and Bangalore.
In December 2015, Yumist closed a US$2 million in pre-Series A round led by Ronnie Screwvala’s fund Unilazer Ventures, with participation from existing investor Orios Venture Partners and Silicon Valley-based investor Steven Lurie.
Below is the full text of the blog post:
IT’S BEEN A FABULOUS JOURNEY, BUT…
When we gave birth to Yumist in 2014, we had a singular vision in mind – to make honest, homely food available conveniently at affordable prices. We wanted to build the go-to food brand for the daily meals market in India, a fragmented market serviced largely by unorganised players offering sub-standard food.
From the very beginning, we knew that our biggest challenge will be finding a business model that’s profitably scalable. We tried multiple iterations across our supply chain to achieve this. There was a time in early 2015 when our bikers had hot meals with them basis a demand prediction algorithm and orders were delivered within 15 mins. We delivered one such order in 2 mins and the customer’s expression was priceless, but our P&L had a different sort of expression.
The one thing going in our favour was we learnt and recovered from our mistakes quickly. By March 2017, we had hit the sweet spot. We were making Rs 65 in margins per order at an average order value of Rs 190 (an avg order for us would serve 2 people), our delivery outlets were breaking even at just 70 orders a day, we were acquiring new customers at Rs 180 and recovering back this money within 45 days. Owing to our product quality and customer experience, we enjoyed good word of mouth (with 50% of our new customers coming through referrals), 70% of our monthly orders were from repeat customers and from March until September we tripled our revenues and gross margins. With these trends, Yumist would have become a profitable company by June 2018.
Yet, we are shutting shop today. We failed to raise the kind of capital that this business required while staying true to the customer problem. In hindsight, there’s a bunch of internal and external factors that led us to this dead end.
From launching in a second city prematurely, or committing to a high growth, high burn model just because prospective investors wanted to see that back in 2015, or taking a tad bit too long to find the right business model, we made our mistakes. We learnt from these mistakes and recovered fast, but maybe not too fast.
Also, every company has a context in which it operates – the economic climate, investor sentiment, the sector one operates in. Essentially, there are external factors which one can’t really control. 2016 onwards, food tech (in the manner the term is loosely used) had amassed a notoriety with investors and media and became almost a dirty word. We failed in all our attempts to fundraise since then, as investors wanted to wait it out.
At this juncture, some questions haunt us. Had we built Yumist in a different time, would the outcome be different? Would we then have raised enough capital allowing us to build this same business profitably across the Country? Maybe yes, maybe no. We will never know.
What we do know is this. Cloud Kitchens are here to stay. It’s probably the case that the first one through the door gets shot. The problem we were trying to solve is a big one and we are certain someone will pick up from where we left. Our wishes and support are with them.
In hindsight, we have no complaints and, in fact, are proud entrepreneurs today. Building Yumist gave us the opportunity to work with great minds, work at the cutting edge of food science and technology in all its facets, and create frameworks and supply chains we believe will become industry standards in the near future. The thrill and meaningfulness of the journey supersede any destination we might have hoped to reach.