Investments

Hungryroot Gobbles Up $3.7 Million

There are few people in the world who feel negatively about healthy eating. Most adults understand that healthy eating is an important and noble goal — or at least a necessary evil if one wishes to be thin, free of Type 2 diabetes or able to eat and finish a meal without feeling a persistent sense of shame.

However, while in theory everyone is a great supporter of healthy eating, the same two things persistently get in the way of our collective good intentions when it comes to eating more vegetables: taste and time.   

The taste part is an essential truth that no adult wants to admit, but that every human has known since they were about 18 months old and spitting their mushed-up peas back in their parents face. Healthy food is not synonymous with delicious food. 

While saying that one is in fact the inverse of the other would be putting too fine a point on it. The reality is that when one is reaching for comfort food, they are almost certainly not looking for a plate of steaming sprouts.

No, when the dog bites, when the bee stings and you’re on the whole feeling sad, you want schnitzel, noodles and warm apple strudel to eat while you watch The Sound of Music and remind yourself that things aren’t so bad. You do not want kale, broccoli or parsnips — these were not omissions on Maria von Trapp’s part, as those are a few of no one’s favorite things.  

Or at least not on their own. As we noted above, saying that healthy food is the antithesis of comfort food or tasty food is not quite fair. There are, of course, all kinds of very healthy and extremely delicious foods in the world if one has the time, skill and inclination to prepare their healthy ingredients thusly.

The average consumer usually lacks one of those three crucial components, meaning they will default to a less nutritious option if it tastes pretty good out of the box (or microwave) – particularly if their equally fast and easy, healthy option involves chowing down on a raw head of cauliflower.

Hungryroot is an attempt to create the equally easy, equally tasty — but actually healthy — option, by offering consumers a wide variety of veggie-based products to choose from. Their mission is simple: “to bring vegetables forward to get them the love they deserve.”

“Convenience food is the category we’re trying to disrupt. The premise is quick and easy to cook, ready to eat, and shelf-stable. It’s canned soup, chemically preserved foods,” co-founder Ben McKean said. “Why is convenience food such crap? If you manufacture on Day 0, your customer buys on Day 14 on average. You can’t do a fresh option. We want to be the first fresh, all-natural convenience food option. It’s crazy that that doesn’t exist.”

Hungryroot offers that option by sending their customers dishes in pre-prepared meal form. It is similar in concept to a variety of meal-in-a-box services on offer, but Hungryroot is different in at least two key regards.

First, it isn’t a subscription service. Consumers can buy their meals à la carte on the company’ site, or by order on Amazon for select items. All meals require some prep on the part of the buyer, though generally cook time clocks in at 5-7 minutes.  

The other rather distinct feature of Hungryroot is that everything it sells is plant-based and thus carb and gluten-free. That’s true of the pastas — where the business got its start in pre-prepared meals — and has carried on in the firm’s offering through desserts and sides.   

Cookie dough from Hungryroot will not be your grandmother’s recipe, unless your grandmother was particularly forward-thinking and made her confections with sweet potato and chickpeas.

As strange as it may sound, McKean insists that what is truly impressive about Hungryroot is that it makes food for everyone not just the super carb-conscious vegans of the world.

“We’re not trying to be a vegan company. I think what’s important about our food is the taste. I could care less if someone goes and after eating our product, the next day they go and eat a steak,” McKean says. “I’m not vegetarian, I’m not vegan. I love the fact that my diet has become 60, 70, maybe 80 percent vegan. Lots of vegan foods aren’t enjoyed by non-vegans — yet they’re incredibly delicious.”

And it is a menu that Hungryroot’s investors are hungry for. The firm announced this week that it has snapped up $3.7 million in financing from Lightspeed Venture Partners, Lerer Hippeau Ventures and Crosslink Capital. All in, the firm has raised a total of $6 million.

McKean noted the firm would use the new funding to “accelerate the business,” though details were mum on how and through what channels.

As for the crowded field he finds his firm competing in, McKean is relatively untroubled. McKean notes that, though there are many food delivery startups out there, they are all competing on the same innovation: getting the food to hungry customers.

And while getting it there is, of course, a big part of his business, McKean noted that for Hungryroot, the central innovation is about the food itself — and innovating on what it is people are actually consuming.  

Investments for the week ended 2-26-16

The end of the last full week of February brought yet another bout of anemic activity, yet again just breaking into the triple-digit level, in terms of millions of dollars. FinTech again dominated, in a trend that at this point seems to be universal, and long- standing, and yet bears repeating, because, to quote Willie Sutton, “because that’s where the money is.”

It is interesting to note that the deal sizes themselves are shrinking, precipitously, with the most recent week seeing investments on a per case basis coming in clustered around the $30 million mark and slightly lower. See below for a sense of just how concentrated activity had been for the period that ended the last full week of the month.

MoneyMe, based in Australia, and a startup that provides short-term lending, benefited from the biggest fund flow of the week, with $30 million taken in from a family fund. The firm has said that its payday lending services can be extended, by dint of the additional funding, to help extend the loans it can make to any one borrower to $10,000 from a previous $2,000.

Separately, the next largest transaction in the week came via an actual acquisition – and cross-border one — wherein German firm Wirecard said last week that it had agreed to buy Brazil’s Moip Pagamentos for nearly $26 million in cash.

Signifyd said last week that it had grabbed $20 million in Series B funding from Menlo Ventures, in a move that helps the firm continue to push machine learning technology that red flags suspicious transactions.

And so what have we learned from the month, where temperatures stood above normal but the investments have been a bit chilled? Drilling down a bit it is security and fraud that held sway in the month, with almost half of all activity, dominated by the Symantec strategic investment by a number of private equity firms. The total investment within FinTech stood at a bit more than $1 billion for the FinTech space.

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