Mumbai-based packaged food startup Yumlane has raised $4 million (Rs 26 crore) in a Series A round of funding led by Singapore-based RB Investments, a company executive told VCCircle.
Existing investors Orios Venture Partners and Flipkart co-founder Binny Bansal participated in the round as follow-on investors. While RB Investments put in $2.5 million, Orios invested between $800,000 and $900,000 and Bansal, $300,000, co-founder Hitesh Ahuja said.
Yumlane, run by Qwikpik Technology Pvt. Ltd, will use the funds to develop products, increase its retail footprint, hire sales and marketing executives, and manage its backend operations.
The company operates in four cities—Mumbai, Pune, Bengaluru and Hyderabad. “Instead of focusing on more cities, I think more of this year will be penetrating deeper and getting us ready for the next phase of growth,” Ahuja said.
Yumlane sells packaged food, specifically pizzas and momos, in supermarkets. Ahuja said the two food products have a 70-30 sales split. The firm sells the products in about 300 modern trade outlets like supermarkets and through online distribution channels.
“We believe snacking is a large unbranded opportunity for consumer brands,” said Harshavardhan Bothra, principal at RB Investments.
RB Investments is the family office of the Bothra family and provides growth capital to early-stage companies. Its portfolio includes jewellery e-tailer Bluestone, online furniture marketplace HomeLane and speciality tea e-tailer Teabox.com.
Yumlane was founded in 2016 by Ahuja, an alumnus of SP Jain School of Global Management and a former executive at Lebanese fast-food chain Maroosh, which is operated by Impresa Hospitality, and private equity firm New Silk Route. The other co-founders are Rueben Ghosh, who was formerly with Riyaz Amlani-led Impresario Entertainment and Hospitality, and Rahul Kumar, a former executive at Morgan Stanley.
Yumlane last raised funding in July 2016, when it secured $1 million (Rs 6.6 crore then) led by Binny Bansal. People Group founder Anupam Mittal, MakeMyTrip co-founder Sachin Bhatia, New Silk Route partner Darius Pandole and Orios had also invested in that round.
The startup launched its pizza in 2017. In March last year, the company was selling 1,000 pieces a month. That figure has climbed to 200,000 pieces a month, claims Ahuja. According to him, the firm has grown 60% month-on-month since March 2017. “Domino’s sells 10 million pieces a month while we sell 200,000 pieces a month,” he added.
The company claims it clocks an annualised run rate of 3 million units and plans to grow this to 10 million units by December.
The company works with a manufacturing partner for production and and a cold chain partner for logistics. It supplies products made by them to the retailers from whom it takes a variable commission for selling its products. “We run the brand, the business, and drive the sales and marketing,” Ahuja said.
Ahuja said the firm aims to be break even in three to five years' time and turn a net profit within five to seven years. “We operate in a business where gross margins will increase as the scale emerges,” he added.
Going forward, the company wants to stick to the snacking space and plans to sell its products via other sales channels that include high-end general stores, corporate offices and online channels like BigBasket. It also plans to launch new products such as cheese or a product with a multi-grain base.
Ahuja emphasised the focus will remain on snacking and casual eating.
Before launching any new product, the company tests seven to 10 samples internally each month before producing trial batches. “We are R&D-focussed. In a startup, innovation is the only way to excel,” Ahuja said.
Orios founder Rehan Yar Khan said Yumlane has rolled out its products rapidly since the seed funding.
“The customer response has been tremendous and we have heard from store manager after store manager that Yumlane is amongst their top two emerging brands,” Khan said.
Orios, founded in 2014 by Khan, backs homegrown ventures operating in the consumer, Internet and business-to-business software product verticals. Its portfolio includes online drug delivery platform PharmEasy and online dental products store PinkBlue.
*This article has been updated to modify the description of RB Investments.