Rocket Internet's HelloFresh Says Hello To $7.5M, As The Meal Prep Service Sets Its Eyes On The U.S.

Berlin’s Rocket Internet has of late made a big business out of incubating and growing e-commerce startups in emerging markets, far away from the U.S. where the competitive field is much more crowded. But today comes news of a funding round for portfolio company HelloFresh that will be used to invest directly in the eye of the storm. The meal-prep company — which assembles ingredients for a dish, and then delivers them with a recipe to your door — has picked up $7.5 million led by Phenomen Ventures, a Russian VC that focuses mainly on e-commerce investments (other fundings include rounds in Fab.com and Uber competitor Hailo).

HelloFresh’s CEO Dominik Richter says will be used to help the company expand into the U.S. market.

“After interest from a wide range of investors, the decision to select Phenomen VC was influenced by their experience in supporting truly global businesses – aligned with our ambitions to become a global leader in the online food space and establish HelloFresh as a global online food brand,” he said in a statement. “It is our aim to use this funding to increase our market share in the US market and expand our very clear market leadership in all other markets by continuing our double-digit month- over-month growth.”

The fashion e-commerce and online marketplaces that Rocket Internet has established and grown in Europe, Asia, Latin America and Africa are well-trodden in the U.S., where companies like Amazon and eBay dominate the scene, with dozens of vertical-specific players vying for a place among them. In fact, Rocket Internet has had to live down many an accusation that its moves in these areas are shameless clones — athough co-founder Oliver Samwer makes a decent argument for why this is not true.

However, in the area targeted by HelloFresh, the market is still in its early days, which may have been one reason that it decided to make the steps to come to the U.S. and build up partnerships there instead of countries in Africa, Asia and Latin America that have been such a focus for the group.

Currently, HelloFresh competes not against Amazon or even giant U.S. retailers, but startups like Blue Apron and Plated, with the latter recently extending its coverage from selected cities on the eastern side of the U.S. to the West Coast.

(Indeed, you might think that the fact that large food retailers are not yet doing much in the area of meal-prep focused deliveries spells an exit opportunity for startups like these; hence Rocket Internet’s interest.)

HelloFresh is priced similar in pricing to Blue Apron, with pre-made boxes and recipes for non-vegetarian meals priced $9.94, six cents (!) shy of Blue Apron’s $10 tag (take $1 off for the vegetarian option). Plated comes in at a bit more expensive $12 for members and $15 for non-members with minimum order requirements.

Other markets where HelloFresh is currently active include Germany, United Kingdom, Netherlands and Australia, and combined with the U.S. the company says it has shipped “several million meals” in total and quadrupled revenues and doubled margins since first opening for business in January 2012; it doesn’t provide specific numbers for any of these.

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