Take Eat Easy – Bankruptcy’s Bread And Butter: Food Startups by Mikey Tom, PitchBook
Take Eat Easy, a Brussels-based food-delivery startup, has announced it will be shutting down, citing difficulties securing Series C investment. According to a blog post published by one of the founders, the company began the process of pitching investors for the round in October 2015, but after 114 rejections and one term sheet that fell through, they had no choice but to file for judicial restructuring, a process analogous to bankruptcy. Take Eat Easy had raised $16 million in venture funding since its 2013 founding from investors including Lean Fund, Piton Capital and Rocket Internet.
This is just the latest in what’s been a tough stretch for food-related startups. Earlier this year we saw on-demand chef companies Kitchit and Kitchensurfing both shut down. Around the same time, Dinner Lab, a company that offered membership-based community dining featuring different chefs, shut down after three-and-a-half years in operation. Meal-delivery startup SpoonRocket also folded back in March.
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So what’s going on here? Well, it’s most likely a combination of things.
One contributing factor could be a shift in focus for the venture industry this year, away from valuing growth at any cost to valuing solid unit economics and more sustainable burn rates. Food-related startups have a lot of costs associated with them, which can make it hard to find attractive margins without massive scale. And while both Take Eat Easy and SpoonRocket reported achieving a positive contribution margin on their orders, it seems fixed costs and a frosty fundraising environment got the better of both of them.
Something else to consider is that the food-delivery industry is pretty crowded these days. Not only are there some heavily funded startups like Deliveroo and Delivery Hero, both of which have raised north of $100 million in funding, but tech giants are working in the space, as well. Uber launched its UberEATS on-demand meal-delivery service just last year and has invested in it heavily, even launching a standalone UberEATS app (it was previously just a feature in the main Uber app). Amazon is also playing in the delivery space via its Prime Now service, which allows Prime members to order food delivered from local restaurants. With competition like Deliveroo and Delivery Hero, as well as Uber and Amazon expanding their footprints, some venture investors may be hesitant to fund smaller outfits going after a similar market.