Pune-based quick service restaurant chain and online food delivery company Faasos Food Services Pvt. Ltd. has raised Rs 41.4 crore ($6.3 million) from existing investors, filings with the Registrar of Companies (RoC) show.
The investors who participated in this round included Ligthbox Ventures II, Lightbox Expansion Fund, Sequoia Capital India, RuNet South Asia and RB Investments.
Email queries and text messages sent to Faasos did not elicit a response at the time of filing this report. The development was first reported by The Economic Times.
In February 2015, Faasos had raised $20 million in a funding round led by Lightbox Ventures. In December 2015, it raised a Series C round of $30 million from Russian investment firm RuNet. Sequoia Capital had led a $8 million Series A funding round in the firm in 2011.
For the financial year ended 31 March 2016, losses at the firm stood at Rs 111.1 crore compared with Rs 24.4 crore in the previous year. Net sales rose almost 65% to Rs 62 crore from Rs 37.5 crore last year. Total expenditure rose to Rs 168.7 crore from Rs 58.1 crore in the previous financial year.
Jaydeep Barman, co-founder and chief executive at Faasos had told VCCircle in February that FY16 was a breakthrough year in terms of expansion, but the cost of growth precluded the revenue benefits accrued. He added, however, that it has borne fruit in FY17, with the same cost base delivering over 60% growth in revenue.
“Besides, the FY16 audited financials have a significant non-cash cost (such as value of ESOPs accrued to employees), which has to be taken as an expense in the P&L as per accounting norms and, hence, the expenses seem to be higher than the actual cash number,” Barman had said, in an earlier interaction, explaining the losses at the firm.
In a VCCircle analysis on startups shutting down in 2016, besides a funding crunch, some of the major reasons for the crisis are the large marketing and advertising spends, discounts and expenditure on expanding user base. The analysis showed that Faasos had funds to last it 388 days.
Barman, a former McKinsey and Company executive, had founded Faasos in 2004 with his batchmate Kallol Banerjee. Both Barman and Banerjee are engineers with MBAs from the Indian Institute of Management (IIM) Lucknow and INSEAD.
In August 2015, Faasos had introduced an app-only model for online food delivery orders.
Online food delivery startups in India have been facing mounting losses of late.
Bangalore-based Swiggy, run by Bundl Technologies Pvt Ltd, posted a loss of Rs 137 crore in FY16 on a total income of Rs 23.6 crore.
Another major player, Zomato Media Pvt Ltd, saw its pre-tax loss widen almost four-fold to Rs 492.27 crore in FY16 from Rs 136 crore the year before.