Choco Bites Secures $100M Series B Funding - Food Supply Chain Innovation

Food Waste and the Digitization of the Supply Chain

It is estimated that roughly 40% of all food produced in the United States ultimately goes to waste. This issue extends globally, resulting in approximately $2.6 trillion in losses each year.

Choco Secures $100 Million in Series B Funding

Berlin-based Choco, a company specializing in ordering software for restaurants and their suppliers, is focused on digitizing the food supply chain. They have recently announced a $100 million Series B funding round, spearheaded by Left Lane Capital.

This new investment brings Choco’s post-market valuation to $600 million. Insight Partners joined as a new investor, alongside participation from existing investors Coatue Management and Bessemer Venture Partners.

Funding History and Company Growth

This funding round follows Choco’s $63.7 million Series A, which was raised in two tranches – $33.5 million in 2019 and $30.2 million in 2020 – at a valuation of $230 million. To date, the company has secured a total of $171.5 million in funding since its founding in 2018.

Core Technology and Pandemic Impact

Choco’s primary technology streamlines the food procurement process, digitizing both ordering workflows and communication between restaurants and suppliers. According to CEO Daniel Khachab, the platform became a crucial tool for operators during the global pandemic.

It enabled them to enhance efficiency in procurement and reduce expenses as they adjusted to rapidly changing market conditions.

Aims for Transparency and Sustainability

The food industry represents a $6 trillion market. Khachab stated that Choco’s goal is to increase transparency and sustainability within the food supply chain.

This initiative aims to improve margins in the food service sector and actively address the challenges of climate change.

The Scale of Food Waste

Extensive research conducted by the company over 14 months revealed that food waste is a central factor contributing to numerous global problems. It is the third-largest driver of climate change and contributes to deforestation, as highlighted by recent events in the Amazon rainforest, and animal extinction.

“Addressing this issue is logical,” Khachab explained. “The food system is inherently fragile, and the pandemic’s first and second waves exposed its inflexibility. This realization prompted the industry to recognize the need for modernization, moving away from outdated paper-based processes.”

Fragmented Supply Chain

Khachab noted that approximately nine different parties are involved between the farmer and the final consumer. These entities often operate independently, creating data silos and hindering comprehensive data collection throughout the chain.

Connecting these parties on a unified platform is crucial for enabling data-driven decision-making.

Strategic Investment During Uncertainty

Faced with uncertainty at the onset of the pandemic, Choco had a choice: to scale back or to invest further in the company. Khachab opted for the latter, expanding the team, geographic reach, and technological capabilities.

This strategic decision resulted in a more robust and adaptable technology platform.

Significant Growth Metrics

Over the past year, Choco experienced a fourfold increase in orders placed through its platform. Annualized gross merchandise value grew from $230 million to $900 million, according to Khachab.

Future Plans and Resource Allocation

As Choco continues to refine its value proposition for the food supply chain, half of the Series B funding will be allocated to technology development. The remaining funds will be used to double the company’s headcount, with a particular focus on expanding the engineering team.

The recent appointment of Vikas Gupta, a former executive from Uber and Facebook, as Chief Technology Officer is expected to facilitate the building of a leading technology team in Europe and accelerate the company’s growth.

Geographic Expansion

Choco currently operates in six markets: the United States, Germany, France, Spain, Austria, and Belgium. The company plans to deepen its presence in these existing markets and expand into new regions, including Latin America, the Middle East, and Asia.