Good Eggs, the once-beleaguered eGrocery platform, has raised $50 million in Series C funding in a round led by leading venture capital firm Benchmark Capital.
The California-based startup that was forced to withdraw from various cities across the US in 2015 after expanding too quickly, recapitalized in 2016 when it raised $15 million of new capital from new investors including S2G Ventures and Obvious Ventures. The successful round and company re-boot was largely attributed to the appointment of new CEO Bentley Hall, a food and retail executive and ex-chief operating officer and chief financial officer at Plum Organics, the organic baby, toddler & kids food brand.
Hall says the positive changes of the last two years were a team effort and born from the realization that Good Eggs is a food company, not a tech company.
“This has involved focusing on pragmatic business basics such as unit economics, annual customer spend, and efficient running operations,” he told AgFunderNews.
Since the last round the company has focused on becoming a one-stop shop for clients instead of a specialty grocer; this means customers can purchase a much wider variety of products including flowers, wine, meal kits as well as fresh produce so they don’t have to go to several shops each week, according to Hall. “We have quadrupled our assortment while sticking to the same local sourcing criteria,” he said.
Good Eggs says it delivers fresh products to consumers usually within 24-48 hours of being harvested and that 70% of its offerings are locally sourced.
Existing investors Index Ventures, Obvious Ventures, S2G Ventures, DNS Capital, Uprising and Collaborative Fund all joined the round as Bill Gurley, Benchmark general partner, joins Good Eggs’ board of directors.
“Our team was deeply impressed by the operational discipline that Bentley and the team at Good Eggs have implemented to transform this business,” said Gurley in a statement. “We made a study of what Good Eggs has achieved and believe the business is very well positioned to capture and scale the growing market of people who are passionate about the quality and provenance of the food they consume. It’s a massive opportunity.”
There are several large benefits to bringing in Benchmark and Gurley, Chuck Templeton, partner at S2G Ventures told AgFunderNews.
“Noone has the two-sided network experience that Bill has in profitably growing and scaling a business,” he said. “Bill’s insights into how to measure and improve user acquisition will be a great complement to the growth team at Good Eggs and Benchmark’s team approach brings their entire organization and networks to the service of their portfolio.”
With the funds Good Eggs will expand further across the Bay Area, adding 750 new jobs, with plans to reach Southern California next year. It was awarded Best Grocery Delivery by San Francisco Magazine in 2017 amid a growing number of food delivery competitors.
Amazon’s acquisition of Whole Foods last year underpinned the ecommerce giant’s intention to lead this space, but instead of presenting a threat, Hall believes the deal acted as a catalyst in shifting consumer behavior towards online grocery shopping.
“We have benefitted from competition training consumers that online brings convenience,” Hall told AgFunderNews. “Every time Amazon announces something, it’s big news but that’s good for the segment overall. Further, this acquisition shows that Amazon is still trying to figure out how to do online grocery, which they’ve been trying for 10 years now. But in a quest to be everything to everybody, they’re moving more and more to centralized buying and that’s not what people want; they want local.”
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