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Formation 8 Leads $15m Series A for Singapore Online Grocer Honestbee 

October 23, 2015

Food e-commerce continues to be a hot commodity this week after Formation 8, the San Francisco venture capital firm, led a $15 million Series A investment round into honestbee, a Singapore-based online grocery delivery service.

Other investors in the round include early stage tech startup investor Pejman Mar, former VP Owen Van Natta, internet entrepreneur Steven Chen, and tech investor and current co-owner of the San Francisco 49ers Giden Yu.

Honestbee’s capital raising round follows earlier activity in the region this month when Womai, the online food delivery subsidiary of major Chinese agribusiness COFCO, raised $200 million Series C funding. Following a trend for strategic investment in the segment, Baidu, one of China’s most established internet search engines, invested in the round, according to CrunchBase. Taiking Life Insurance also participated.

Womai currently ranks third on China’s list of online food retailing business, claiming a 17 percent share of the market during the first half of 2015, according to local reports. Leading the pack are Alibaba’s Tmall and Tencent ally

Offering branded goods to consumers throughout China, Hong Kong, Macau, and Taiwan, Tmall opened for virtual business in 2008.

Honestbee is still in its early days after launching in August 2015, although it already boasts 100 staffers and has set its sights on expanding into other countries already. Just last week the company opened in Hong Kong and it has six other countries mapped out for openings over the next six months, including Japan and Taiwan.

Offering over 15,000 products and claiming to compensate its shoppers well, honestbee’s team of shopper-deliverers find the freshest items, including meat and produce. Instead of charging a markup on store prices, the company adds a delivery fee unless the customer meets a minimum order amount that varies in each market.

The company’s method is based on substantial market research. According to the group, Singapore residents require roughly four hours to complete their weekly grocery shopping. Shoppers with vehicles can whittle that time down, but most folks living in honestbee’s area only have public transportation at their disposal.

Honestbee’s platform operates in a way similar to other big hit grocery delivery companies in Singapore, including Instacart. Both platforms use partnerships with brick-and-mortar companies to supply delivery requests. Other grocery delivery companies like Redmart opt for warehouses to store goods before fulfilling orders. Redmart, which quickly stockpiled $55 million in venture funding, maintains its own logistics system and warehouse.

In the future, the company hopes to help consumers accomplish other daily chores that can often take time away from fun and relaxation. They currently offer pet supply shopping services and deliver from a few select special retailers.

Honestbee will experience more competition soon as HappyFresh, the Indonesian grocery delivery service, closed a $12 million Series A led by Vertex Ventures, and has set its sights on opening in Singapore.

Expanding across multiple geographies is no easy feat. Some similar services in India have struggled and just a few weeks ago two services were forced to close operations. Good Eggs, one of the first of its kind in the US, was also forced to retract from some cities in the country, and focus just on its home town of San Francisco. Commentators argue that there are few economies of scale for what is largely a logistics business.

 Have news or tips? Email [email protected] 

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