Lets talk about F#@$

Prelude
#Foodie4life would be a sure shot attribute of any
Indians. To put it more candidly, if you are not a
Foodie then your Indian connection is suspect.
So with a country like India where you have a
dish for every occasion, how come the new
breed of Entrepreneurs are finding it impossible
to get a foothold?
Food (without the TECH) is considered to be a
recession free industry but the ever increasing
body counts of failed startup paints a completely
different picture.

Who are we?
We put
Technology to
work to
Simplify life !
Over the last 12 months, VAYUZ has
partnered and mentored over a dozen
startups across various Industry verticals
but it was not until recently that we got an
opportunity to partner not one but two
Startups in the Food space.
Since we are responsible to build a
compelling and engaging product for our
customers, the research team @ VAYUZ as
a standard practice decided to dig in to
identify reasons behind the failure of
FoodTech Startups.

About
A disturbing analogy can be drawn between
#FoodTech and meteor shower, they look
beautiful when they enter the atmosphere, but
are shortlived and can leave a huge dent on the
impacted areas.
So let’s go through the next few slides to
understand reasons for continuous failure of
Food based Startups.
We are not a big fan of the term “FoodTech” and
we firmly believe that over emphasis on the word
“Tech” is somewhere responsible for the
downfall.

The F&B Industry – Market Overview
Restaurant
s
40%
Pubs &
Clubs
15%
Take Out
17%
Hotels
9%
Cafés
16%
Others
3%
Organized F&B Market Breakup
India’s F&B industry is expected to
reach INR 3.8 Trillion in sales by the
year 2017, expanding at an average
annual pace of 24%.

In 2014 and 2015 combined,
around 55 start-ups in Food
segment raised approx. $373
Million (Rs 2,450 crore) from
investors.
Q1 & Q2, 2016 have seen more
than $70 Million in investments in
the Food segment.
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
1985 1995 2005 2015 2025
Indian Food Consumption
accelerating over next decade
INR Bn
The F&B Industry – Recent Scenario

Despite raising many millions in funding
a few popular Startups in Food segment
like PepperTap, Spoonjoy, Langhar,
Eatlo among others gave up their share
of the pie.

So, what went wrong ?
Here is an INSIGHT to reasons, which might
have triggered this MESS.
Even after so much hype and positive finding from
the analysis of research firms, things didn’t work
well for all.
There is not one mistake that leads to a startup
failure rather a bouquet of thorns clubbed together.
The Domino Effect !

Operational
Slackness, 34.4
Financial
Mismanagement,
31.1
Incorrect
Market
Analysis, 20.7
Customer
Retention, 6.9
Lack of
Technology
support, 6.9
Reasons for startup failures
Source: YourStory
We infer 5 broad
reasons, based on
these statistics ..

#1 Operational Slackness
1. Focussing more on “Delivery on time” than on “Quality”.
2. Spreading too fast and too thin.
3. Wrong Team Mix and sometimes inexperience of founding team.
4. Unable to deliver on the volume of orders - Getting 100+ orders
a day is easy but managing the preparation and deliveries of these numbers is a
challenge.
5. Ignoring customer feedback.

#2 Financial Mismanagement
1. One of the major reasons has been the inability to raise a second stage
funding which results in eventual shutdown.
2. Mismanagement of Funds, spending in the wrong place. Never loose money,
Beware of little expenses.
3. Over emphasis on raising money – a big distraction element, taking focus
away building THE RIGHT REVENUE MODEL.
4. Inability to keep track on realistic numbers.

#3 Incorrect Market Analysis
1. Building and showcasing the wrong
“Selling Proposition”, when its food the
proposition has to be “FOOD”.
2. Canibalisation of the system by offering
“free free free” offers.
3. You know its wrong when you are trying
to create a market.
4. Driven by competition instead of
focussing on “What a customer wants”.
5. Ill-fit marketing and branding strategy.

#4 Expansion vs Retention
1. Greater focus on expanding
exponentially both physically and
digitally (APP Downloads) than
Customer Retention.
2. Over emphasis on acquiring new
customers and ignoring the current
base.
3. Absence of a strong community
culture in the ecosystem. Lets not
forget its food and people like to talk
about it.

1. Obsession with the word “Tech” than “Food”
has been the story of FoodTechs. More time,
money and other non-renewable resources is
spent in developing the app / platform rather
than focusing on quality of service or menu
range or customer retention.
2. #Beinghuman is the way forward when it
comes to food, customers want human
intervention along with personalization.
3. Missing customer centric element in
interfacing technology like Website or Mobile
App.
#5 Technology over Service
FoodTech
Forget the Tech
Customers care about
THE FOOD !

A little about startups, in the
segment, that have gone empty
stomach ..

Founded in 2014 by Sai Priya Mahajan and
Rahul Harkisanka, EATLO - a food delivery
app prominsing the users to get ‘quick and
hassle free food from the best chefs’ halted
its operations due to the lack of funds.
DAZO - an internet-based kitchen, founded
by Shashaank Singhal and Monica Rastogi
pivoted to be an aggregator of select
restaurants. The Startup shut down due to
lack of funding and premature expansion,
despite raising an undisclosed amount from
7 investors in April, 2015.

SPOONJOY the Internet-first restaurant
founded in 2013 by Manish Jethani,which
counts Sachin Bansal and SAIF Partners
as investors, until recently served 1,500-
1,800 orders a day in Bengaluru. The
startup unfortunately had to pause its
operations in Delhi and parts of
Bengaluru due to operational pressure
and limiting.
TinyOwl, a Mumbai-based startup,
founded in 2014 by Harshvardhan
Mandad finally merged with logistics
player RoadRunnr. The reasons cited are
high cost of logistics and a oversaturated
market.

Big players too are feeling the heat
Zomato, founded in July 2008 by Pankaj
Chaddah and Deepinder Goyal is a $1 Bn+
restaurant discovery portal laid off around
300 staff of its current workforce in order
to cut costs in weaker parts of its business
and shift more focus into revenue-
generating areas like reservations. We call
it OPTIMIZATION!!
Food Panda, founded in April 2012 by
Ralph Wenzel and Rohit Chadda, a Rocket
Internet backed venture too ended its
doldrums with the Indian unit raising $22.4
Mn recently.

InnerChef, founded in April 2015, by serial
entrepreneurs Rajesh Sawhney and Sanjeev
Singhal has acquired two food tech companies –
Flavour Labs from Gurgaon and EatOnGo from
Bangalore. With this InnerChef has entered the
mobile kitchen space. Recently raised $2.5 million
in funding from Japanese fund Mistletoe.
JollyFoodFellow, founded in 2015 by Rajiv Sharma
and Niraj Harlalka, provides food entrepreneurs
analytics-led engagement and loyalty programs
on its platform.
FreshMenu, founded in 2014 by Rashmi Daga has
raised approx. $38M in total.
The situation is not so gloomy after all !

Big Opportunity
The scoresheet doesn’t look too great but general sentiment is still optimistic but no longer blinded. THERE IS
STILL NO LEADER…which means that this segment is still a greenfield pasture.
Thanks for the read, hope you found it interesting. And yes the “F” trick was to grab your undivided attention.
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At VAYUZ Technologies, we bring a fresh perspective into product development by designing and creating
solution based on market intelligence and TAG understanding. We help startups to translate their vision into
sustainable business model and build SUCESSFUL BUSINESS. Our founding team has a prior experience of
executing India’s 2nd most over subscribed IPO and also building a funded Edtech Co. Our across industry
customer base further gives us an unparelleled insight and definitive edge.
So give us a shout if you are planning a startup or thinking about a mobile app or trying to figure out a solution,
we would be happy to HOST you.
PS: Our coordinates are mentioned below.

Lets talk about F#@$

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