Snackpass Raises $70M at $400M+ Valuation

A New Approach to Food Ordering: Snackpass Secures Series B Funding

In the competitive landscape of food delivery, where companies vie for dominance through discounts and expedited services, a novel startup is gaining traction. Snackpass distinguishes itself with a socially-focused concept – enabling users to view their friends’ food choices, facilitate mutual ordering, and arrange group pickups.

Snackpass: Food and Friendship Combined

Snackpass, self-described as a “food meets friends” platform, operates as a social commerce system for restaurant orders. The term “snack,” according to the CEO, carries a dual meaning, referencing both eating and playful affection. The company has recently secured $70 million in Series B funding to fuel further expansion across the United States.

From Yale Physics Lab to Rapid Growth

Founded four years ago by Kevin Tan, while he was a physics student at Yale, alongside Jamie Marshall, Snackpass has maintained a strong connection to its academic origins. Currently, the platform boasts 500,000 users across 13 college towns. Its growth has been remarkable, experiencing a sevenfold increase year-over-year, and the latest funding round values the company at over $400 million.

A Diverse Investor Group

The funding round was spearheaded by Craft Ventures and included participation from notable investors such as Andreessen Horowitz, General Catalyst, Y Combinator, Pioneer Fund, and a substantial number of individual backers. This demonstrates the significant attention and confidence Snackpass is attracting.

Notable Investors Back the Platform

Among the investors are AirAngels, the alumni network of Airbnb; Bastian Lehmann, formerly of Postmates; hospitality entrepreneur David Grutman; Golden State Warriors player Draymond Green; Gaingels; HartBeat Ventures, the venture fund of Kevin Hart; the Jonas Brothers; Shrug Capital; Pags Group; DJ Steve Aoki; Turner Novak of Banana Capital; William Barnes of Moving Capital; and the Uber alumni investor syndicate.

Disrupting the Traditional Ordering Queue

Unlike many food-ordering platforms focused on delivery and competitive logistics, Snackpass has adopted a different strategy. It aims to address a more fundamental aspect of the restaurant experience: the waiting line. The company’s innovation lies in minimizing the need for customers to physically queue for their orders.

Identifying a Core User Need

Tan explained that user feedback revealed a surprising preference for avoiding queues. Customers indicated they simply preferred standing in line to order rather than seeking alternative solutions. This insight shaped Snackpass’s vision of eliminating the need for traditional registers altogether.

Focus on Pickup and Reduced Costs

While Snackpass integrates with delivery services like UberEats, the vast majority – 90% – of orders are for pickup. This strategic focus eliminates the need for the company to manage its own delivery fleet and associated infrastructure, significantly reducing operational costs.

The Social Aspect of Dining

The platform appeals to a younger demographic who enjoy the social experience of dining. Customers appreciate the opportunity to socialize and share photos of their food and drinks, particularly popular items like boba tea, creating a more engaging experience.

A Larger Market Opportunity

Tan highlights that delivery currently represents only 8% of the overall restaurant industry, which is valued at $800 billion. The remaining 90% of transactions still occur offline, presenting a substantial opportunity for disruption. Snackpass is focused on capturing this larger, untapped market.

High User Engagement

Snackpass demonstrates strong user engagement, achieving 80% penetration among students in its launch markets. The average customer places approximately four and a half orders per month, with some ordering daily. This level of engagement surpasses that of traditional delivery platforms like UberEats.

Commission Structure and Additional Services

The company’s commission rates begin at 7% and it offers a comprehensive suite of services, including online ordering, self-service kiosks, digital menus, marketing support, and a customer referral program. Currently profitable in select markets, Snackpass is poised for further growth and expansion of its service offerings.

A Resemblance to Snapchat

There's a notable similarity between Snackpass and Snapchat, extending beyond the phonetic resemblance of their names. Both platforms have successfully resonated with college-aged users and share a whimsical approach to simplifying everyday tasks.

Potential for Social Integration

Currently, Snackpass lacks a robust social “user graph” or deep integration with existing social media platforms. However, future partnerships with companies like Snap and Facebook, which are increasingly involved in commerce, could enhance the platform’s social features.

Industry Recognition

“In building a social experience around food through shared rewards, gifting, and a social activity feed, Snackpass has created a dynamic and attractive restaurant ordering system,” states Bryan Rosenblatt, partner at Craft Ventures. “The growth of its marketplace and virality of the product coupled with Snackpass’ outstanding team and vision, make it the ultimate solution for consumers and businesses alike. We are thrilled to help take Snackpass to the next level with this latest round of funding.”

Note: This article has been updated to clarify Snackpass’s profitability, correct investor names, and confirm that the 7x growth rate is year-over-year.