AI-powered grocery service Hungryroot raises $40M17 Jun 2021
Online grocer Hungryroot raised $40 million in a Series C funding round, according to a press release from the company. The funding round was led by private equity firm L Catterton, and Hungryroot said the funds will be used to “substantially” increase the number of groceries and recipes it offers, grow the team, invest in automation technology and optimize its personalization algorithm.
Hungryroot focuses on personalization of grocery service through its AI-powered platform that curates shopping carts for individual customers. According to the company, it’s personalization service not only saves consumers two to three hours per week in shopping time, but it manages to do so while increasing revenue. Compared to other grocery delivery services, the average customer average customer spending 64% more on Hungryroot in their first five months.
This model has made Hungryroot profitable. The company said that it has been profitable since 2020 and is on track to make $175 million in revenue this year. Next year, the company said it is forecasting $300 million, making it one of the coveted technology startups that is running in the black rather than relying on investor dollars to keep it afloat.
Part of the success for Hungryroot comes from its subscription services that can be tailored to specific diets. From an array of emerging brands in its store to the service’s ability to provide individual nutritional support through meal planning, Hungryroot has employed its proprietary predictive technology to deliver both groceries and recipes to individuals making it into a one-stop-shop for busy consumers.
Its model is similar to that of meal kits where shoppers receive weekly deliveries based on their preferences, but this online grocer takes things a step further by providing an end-to-end grocery shopping experience rather than simply providing the ingredients for individual meals. In addition to simplifying grocery shopping, the service has also been able to take advantage of the surge in popularity of online grocery shopping.
The pandemic has altered the concept of shopping. What was once a trip to a brick-and-mortar store has become a digital interface where one’s weekly dietary needs can be filled with the click of a button. While many places are beginning to reopen, shopping online appears to be here to stay. A study by Mercatus and research firm Incisiv predicts that online grocery sales will double their current market share and account for 21.5% of total U.S. supermarket sales.
With such a rosy outlook, investors have poured into the space, and services such as Good Eggs, Weee and Imperfect Foods have announced influxes of funding in recent months. Hungryroot itself raised $35 million since its founding in 2015, and this recent funding announcement more than doubles that sum. The company is now valued at $750 million, Bloomberg reported.
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