President Donald Trump’s widespread tariff hikes have already led to a reduction in growth forecasts amid an uncertain public mood. However, on Tuesday, Food E-Commerce startup Grubmarket seemed impervious to these macroeconomic concerns. It announced a new $50 million equity round with a money post valuation of over $3.5 billion. The move highlights that despite the noise, some tech companies have not slowed their expansion plans.
Funding Round – Series G includes participation from 3spoke Capital, Joseph Stone Capital, Liberty Street Funds, Pegasus Tech Ventures, Pinegrove Capital Partners, Portfolia, and Roc Venture Group.
In the food secondary market, which is estimated to be worth around $1 trillion a year, Grubmarket’s valuation is rising rapidly behind the growing balance sheet. The US business has acquired a broad ambition to digitally transform the American food supply chain industry by acquiring its position as an online farmer’s market that connects North American consumers with local fresh produce suppliers.
The last Grab Market Round we covered was Series E, which raised $120 million in 2021 at a valuation of $1.2 billion. A year later, we sourced Series F for each pitchbook. It attracted $120 million at a $2 billion valuation. (Note: Series G detailed in last year’s Pitchbook is incorrect.)
Other investors in the company include battery ventures, Tiger Global, Y Combinators and over 100 other names for each Pitchbook.
Grubmarket is a huge food distribution business through farm-to-fork proposals, but in the case of this latest equity fund pay raise, the money to build more technology to improve the way customers manage their businesses is particularly focused on AI. Grubmarket wants to use AI to help its customers process a lot of data. Many of them are mixed together with offline formats, including voicemail and post-it notes.
We are looking at bigger acquisitions
Grubmarket is currently on track to generate revenues of $2.4 billion from $2 billion in 2024. CEO and founder Mike Xu said in an interview that he is making profits on an EBITDA basis.
With Food e-Commerce World integrated, he also said Grubmarket will use some of its cash to make more acquisitions for both the startup and more legacy businesses. “The industry has always had all the sizes of wholesale and distributors,” he said.
Food is of course a fundamental need, but in a wealthy country like the US it is also a big fixture with entertainment, thanks to a huge boost to commercialization through channels such as social media and television.
Companies that can square their demand with supply and strong unit economics can cause killings.
Grubmarket originally named it as a healthy food procurement and distribution startup, and, in collaboration with different groups of farmers and other producers, took a technology-first approach to deliver products along with a handful of giants like whole food, along with most retailers.
Over time, it further strengthened its food distribution business – its revenue and valuation became even higher, especially seeing the rise in trade during the peak of Covid-19. Recently, they have begun scooping up a variety of other occasionally broken food distribution startups, including Good Eggs, to build a profile to provide directly to consumers.
That cost reduction and integration appears to be working. All options were exhausted when Grab Market bought and there was a good egg at the end of the runway. Today, it’s profitable, Xu told TechCrunch.
With around 12,000 employees now, Grubmarket is spreading its wings by bringing technology and business models to more countries. In addition to being active in the entire US, it has a presence in Argentina, Canada, Chile, Colombia, Egypt, India, Mexico, South Africa and Spain, and is planning to expand further. The procurement and distribution networks say it covers around 70 countries overall.
Keep focused
For now, at least, Xu is either pretty optimistic about Trump’s tariffs and how it will affect his business, or otherwise book a comment. (It has a clear meaning at least in terms of higher prices, potential supplier collapse, and lower demand.)
Xu said so far few have directly affected logistics and tariffs on agricultural products and other foods Grubmarket traded.
In the meantime, he will focus on AI and other technologies. He considers it to be the basis for every version of his industry in the 21st century.
Last year, he said that Grubmarket released “really comprehensive” enterprise AI software for the food supply chain industry. This includes the components that provide business intelligence, the AI analysts that help customers plan and manage cash flows, and the third AI, essentially an ordering assistant.
The latter actually utilizes the way the food supply industry is in line with a variety of modalities. Producers, wholesalers, other distributors and logistics companies are taking part in a huge amount of data, but the majority of them still come through unstructured, highly offline modes, including voicemail messaging, paper scraps, and text messages on many platforms.
The purpose of an AI assistant is to take everything that comes in and make it a common form that is used throughout the rest of the system. Xu said many components have patents or applications filed, highlighting the seriousness of their business efforts.
Xu does not share what the next step in Grubmarket is and whether it can include public lists. The recent market seems open to as many scaled startups as it eases private stays and semi-honor arrangements or buys back stocks, as it is for viewing lists at IPOs.