These specialized Africa VC funds are welcoming co-investors

For global venture capitalists still on the fence about entering Africa, a first move could be co-investing with a proven fund that’s already working in the region.

Africa’s startup scene is performance-light — one major IPO and a handful of exits — but there could be greater returns for investors who get in early. For funds from Silicon Valley to Tokyo, building a portfolio and experience on the continent with those who already have expertise could be the best start.

VC in Africa

Africa has one of the fastest-growing tech sectors in the world, as ranked by startup origination and year-over-year increases in VC spending. There’s been a mass mobilization of capital toward African startups around a basic continent-wide value proposition for tech.

Significant economic growth and reform in the continent’s major commercial hubs of Nigeria, Kenya, Ghana and Ethiopia is driving the formalization of a number of informal sectors, such as logistics, finance, retail and mobility. Demographically, Africa has one of the world’s fastest-growing youth populations, and continues to register the fastest global growth in smartphone adoption and internet penetration.

Africa is becoming a startup continent with thousands of entrepreneurs and ventures who have descended on every problem and opportunity.

These specialized Africa VC funds are welcoming co-investors

For global venture capitalists still on the fence about entering Africa, a first move could be co-investing with a proven fund that’s already working in the region.

Africa’s startup scene is performance-light — one major IPO and a handful of exits — but there could be greater returns for investors who get in early. For funds from Silicon Valley to Tokyo, building a portfolio and experience on the continent with those who already have expertise could be the best start.

VC in Africa

Africa has one of the fastest-growing tech sectors in the world, as ranked by startup origination and year-over-year increases in VC spending. There’s been a mass mobilization of capital toward African startups around a basic continent-wide value proposition for tech.

Significant economic growth and reform in the continent’s major commercial hubs of Nigeria, Kenya, Ghana and Ethiopia is driving the formalization of a number of informal sectors, such as logistics, finance, retail and mobility. Demographically, Africa has one of the world’s fastest-growing youth populations, and continues to register the fastest global growth in smartphone adoption and internet penetration.

Africa is becoming a startup continent with thousands of entrepreneurs and ventures who have descended on every problem and opportunity.

Blue Apron is considering selling itself

Meal kit company Blue Apron has long been on the struggle bus — whether it’s been its lackluster debut on the public market, employee lawsuits or layoffs. So, it should come as no surprise that the company is considering selling itself in order to maximize value for shareholders.

In addition to a potential sale, Blue Apron is exploring a merger, raising capital through either the public or private markets, selling off assets or some combination of the above.

“We continue to believe that we have the right strategy to drive our resumption of growth as we work to launch additional new capabilities and test new product offerings,” Blue Apron CEO Linda Findley Kozlowski said in a press release. “Our strategic alternatives process, together with our cost optimization initiatives, is intended to best position the company for the future, including to support our growth strategy. These efforts reflect the commitment of the Board, management and myself to doing what’s in the best interest of the business, Blue Apron’s shareholders and other stakeholders.”

In Q4 2019, Blue Apron reported a net revenue decrease of 33% year-over-year, to $94.3 million. For the full fiscal year of 2019, revenues decreased 32%, to $454.9 million from $667.6 million the year prior. Blue Apron attributes this to a decline in customers.

Soylent shakes up its executive team, naming Demir Vangelov as its new CEO

Soylent, the once high-flying Los Angeles-based meal replacement startup that has raised $72.4 million in financing from investors including Google Ventures, Lerer Hippeau and Andreessen Horowitz, has shaken up its executive team.

This week, the company announced in a blog post that the company’s chief financial officer, Demir Vangelov, would be taking over the top spot at the company and current chief executive Bryan Crowley would be stepping down.

“We would like to thank Bryan Crowley for his immense contributions to the company,” wrote Soylent chairman and founder Rob Rhinehart, in a statement.

Vangelov, who’s taking over from Crowley, previously served as an executive at the milk alternative company Califia Foods and at Oberto Foods, so he knows consumer packaged brands.

Crowley came to the company with grand ambitions to revitalize the Soylent brand and product line. The company had introduced a line of snack bars to complement its line of powders and drinks, while updating its drink line with a nootropic beverage containing caffeine and supplements supposedly designed to boost cognitive performance in addition to providing a meal replacement.

Soylent also set up fancy digs in Los Angeles’ arts district and established a Food Innovation Lab, which only a year ago awarded $25,000 to a few food startups working there.

Now, only a year later, the Food Innovation Lab is shuttered and Soylent has moved to a smaller office space. The company declined to comment on the news or its new strategy.

In some ways, Soylent may suffer from being a progenitor of an investment thesis which has passed it by. When the company launched in 2013, it was a fairly novel idea to start a new food brand, as Rhinehart notes in the blog post announcing the executive change:

Soylent started as a movement. In 2013, there was scarcely any innovation or attention to one of the world’s most important product sectors: our food. Today, innovative food companies are performing record-breaking IPOs, new retailers are raising massive growth rounds, and food, agriculture, and ingredient technologies are some of the most disruptive startups in the ecosystem. But we still have a lot of work to do to fulfill Soylent’s mission of nutrition for all.

Today we are making some changes at the company. We are renewing our commitment to being transparent, authentic and science-driven, all while putting the customer first. To do this we are going to re-focus on our core products. We will be improving our current product line as well as bringing some truly innovative ideas off the shelf and into the market, and we will be improving our prices by focusing on quality over quantity when it comes to distribution and marketing.

Spaceflight Industries to sell its satellite rideshare launch business to Japan’s Mitsui & Co. and Yamasa

Spaceflight Industries, owner of both Spaceflight, Inc. and BlackSky, is selling the Spaceflight, Inc. portion of its business to Japanese industrial megacorporation Mitsui & Co, and Yamasa both of which will co-own the company in a 50/50 joint venture after its closing. The deal will see Spaceflight continue to operate as an independent business based in the U.S. and headquartered in Seattle, with the same mission of providing rideshare launch services for small satellite payloads.

Meanwhile, Spaceflight Industries will use the funds generated from the sale (the terms of the deal were not disclosed) to re-invest in its BlackSky business. BlackSky is an Earth observation company that deals in geospatial intelligence, and that currently operates four satellites in orbit, with eight more planned to join its constellation sometime later this year.

The deal also means that Mistui & Co, which is one of Japan’s largest businesses and which operates in a variety of sectors including infrastructure, energy production, IT, food, consumer products, mining, chemicals and more, will now be in the rocket launch rideshare business as well. Mitsui also has an aerospace arm that includes a space business which provides satellite development, launch and operation services, but noted in a press release that Spaceflight will become “the cornerstone” of its space strategy pending close of the deal.

Spaceflight, Inc. has been offering its services since 2010, and has launched a total of 271 satellites on 29 separate rocket launches, with 10 missions set to take place in 2020 alone. The company’s business seems poised to grow as more launch providers and more small satellite operators enter the market, with many predictions indicating sharp uptakes in orbit-based businesses to come over the next decade.

This arrangement is perhaps indicative of things to come in the space industry, as more young companies look at their overall business and determine how best to delineate things to continue their growth and return funds on investment to stay on mission. SpaceX, for instance, has confirmed it’s looking at spinning out its Starlink business and taking that public, a move that could generate significant funds for it to then funnel back into its core launch business in pursuit of its goals of making humans multi-planetary.

The deal still has to undergo review by the Committee on Foreign Investment in the United States (CFIUS) because there’s a national security interest involved, given Spaceflight’s past work. This is expected to take multiple months, and the companies say they anticipate the deal will close sometime during Q2 2020 if everything is approved.

Alpha Foods raises $28 million for its vegetarian prepared foods

Alpha Foods, the vegetarian prepared food manufacturer, has raised $28 million in financing for its portfolio of vegetarian burritos, tamales, nuggets, pizzas, burgers, patties, and sausages.

The Glendale, Calif.-based company was launched by Loren Wallis, the founder of the dairy substitute, Good Karma Foods, and Cole Orobetz, a former director with the agricultural debt lending firm Avrio Capital.

First launched in 2015, Alpha Foods previously raised $9.5 million in financing from investments firms like New Crop Capital and AccelFoods, whose other brands include Kite Hill, Good Catch, BRAMi, and Evoke Healthy Foods.

As more Americans move to supplement their diets with plant-based products, companies like Alpha Foods have found willing investors for new food brands. The company’s new round was led by AccelFoods with existing investors including New Crop Capital, Green Monday Ventures and Blue Horizon also participating.

Companies like Alpha compete with huge consumer packaged goods companies like Kelloggs (through its Morningstar Farms line of vegetarian products) and Nestle (through Sweet Earth Foods).

While the Morningstar Farms brand might seem a bit stale, the market has been reinvigorated through the marketing muscle and venture dollars supplied by companies like Beyond Meat and Impossible Foods whose products have captured contracts from some of the world’s biggest fast food chains — including McDonalds, KFC, and Burger King.

Alpha Foods said it will use the latest money to launch new products, make new hires and expand its distribution channels nationally and internationally.

The company is already sold in well over 6,000 stores at chains including Wegmans, Walmart, Krogers, and Publix.

“As more and more people actively seek out plant-based options, whether for their health or the environment, we are looking to expand our innovations within the category and bring easy to prepare products to a wider audience,” said Cole Orobetz, Co-Founder and President of Alpha Foods, in a statement.

The sale of pre-prepared plant-based meals reached $387 million in 2019, up 6% over the past year, according to data from the Good Food Institute.

“We are in the early days of plant-based consumption. As a portable, functional food business geared towards the newly emergent flexitarian consumer, the Alpha platform meets all of its customers snack and mealtime needs,” said AccelFoods Managing Partner, Jordan Gaspar. “We couldn’t be prouder to lead this strong nexus of collaborative investors, who had the opportunity to organically build trust this past year allowing for an incredibly successful outcome in this financing.”

How Bykea is winning Pakistan’s ride-hailing and delivery market

Increasingly, the streets of Karachi and Lahore are being flooded with men riding bikes and wearing green T-shirts, a writer friend recently told me. In a sense, these men represent the emergence of Pakistan’s tech startups.

India now has more than 25,000 startups and raised a record $14.5 billion last year, according to government figures. But not all Asian countries are as large as India or have such a thriving startup ecosystem. Long overdue, things are beginning to change in bordering Pakistan.

Bykea, a three-year-old ride-hailing and delivery service, today has more than 500,000 bikes registered on its platform. It operates in some of Pakistan’s most populated cities, such as Karachi, Lahore and Islamabad, Muneeb Maayr, Bykea founder and CEO, told TechCrunch.

Maayr is one of the most recognized startup founders in Pakistan, and previously worked for Rocket Internet, helping the giant run fashion e-commerce platform Daraz in the country. While leading Daraz, he expanded the platform to cater to categories beyond fashion; Daraz was later sold to Alibaba.

Instacart gets into ready-to-eat food deliveries with build your own sub service

Grocery picking service Instacart is dabbling with on-demand food delivery, announcing the launch in Florida of a pre-made meals delivery option that shoppers can tag onto a bigger supermarket order.

It’s partnering with US supermarket chain Publix for the initial launch of Instacart Meals — offering what it dubs a “digital deli counter” where app users can build their own sub and have it picked up and delivered alongside a grocery order.

“We know that when customers grocery shop, they’re thinking about both the food they need for the week in addition to what’s for dinner that night,” it writes in a blog post announcing Instacart Meals.

It says the service will be rolling out to Publix locations across Florida “in the coming weeks”, and to “nearly all Publix stores across the Southeast in the months ahead”.

“We see the highest volume of orders placed on the Instacart marketplace between 2 and 4pm and at less than half the price of an average fast-casual food order, made-to-order grocery meals offer access to a fresh, easy and more affordable option when life is hectic and dinner is soon,” it adds.

Instacart says the meals product integrates with existing grocery order management systems to generate what’s touted as “precise preparation and counter pickup windows at the end of the Instacart shopper’s shopping route”.

“This ensures that the customer’s sandwich gets from the store to their door as fresh as possible,” it adds.

Although quite how long a ready-to-eat sandwich might end up waiting around getting soggy before it’s picked up and delivered to the customer as lunch is one question. (As fresh “as possible” is a pretty open-ended promise.)

It’s notable that Instacart is touting the premade meals service as a price competitive option vs an “average fast-casual food” — presumably such as those a consumer might order via an on-demand food delivery app such as PostMates or Uber Eats.

So “more affordable” seems likely to translate to ‘not as quickly as those kind of services’ — but, hey, you’re getting cheaper eats.

Instacart also makes a point of noting that the pre-made meals feature will automatically apply any relevant deals vis-a-vis the rest of the shopping cart — so that app users will get “all applicable combo options and discounts”, just as an in store shopper would.

The move is the latest sign of the category overlap going on between on-demand food delivery and grocery delivery services, as startups in the space search for ways to cross-sell existing users on additional products that can boost the unit economics, per delivery.

Spain’s Glovo, for example, has expanded from on-demand food delivery into running its own dark supermarkets — where it stocks and sells (via app only) a limited selection of groceries which can be tagged onto a ready-to-eat food order. Though it’s also focused on very fast delivery as the differentiating factor for this ‘Super Glovo’ service, and does partner with select supermarkets for larger grocery deliveries.

Instacart, meanwhile, looks to be hoping to gobble some of the lunch of on-demand food delivery app rivals by being able to undercut them on price, as the meals are coming from supermarket deli counters not a standalone fast food brand. So speed of delivery can be handled as a secondary consideration.

Instacart Meals is the latest product expansion from the company — which, in recent years, has been building out an alcohol delivery service. It is also piloting prescription deliveries with Costco in select states.

The company has a network of 350 partner retailers operating 25,000+ stores across more than 5,500 cities in the U.S. and Canada — from which it could seek to build out the pre-made food offer.

Earlier this month Instacart also announced upgraded pick-up options. The move came after the business had come under fire for how it compensates the army of professional shoppers who do the picking and delivering of customer orders.

Diet autopilot Thistle raises $5M for health food subscriptions

What if it was easier to eat salad than junk food? Most diet routines take a ton of time, whether you’re cooking from scratch, making a meal kit or seeking a nutritious restaurant. But on-demand prepared food delivery companies like Sprig that tried to eliminate that work have gone bankrupt from poor unit economics.

Thistle is a different type of food startup. It delivers thrice-weekly cooler bags customized with meat-optional, plant-based breakfasts, lunches, dinners, snacks, sides and juices. By batching deliveries in the less-congested early morning hours and optimizing routes to its subscribers, or by mailing weekly boxes beyond its own geographies, Thistle makes sure you already have your food the moment you’re hungry. Whether you heat them up or eat them straight out of the fridge, you’re actually dining faster than you could even place an Uber Eats order.

The food on Thistle’s constantly rotating menu is downright tasty. You might get a sunrise chia parfait for breakfast, a chicken tropical mango salad for lunch, a microwaveable bulgogi noodle bowl for dinner, with beet hummus and kale-cucumber juice for snacks. Thistle’s not cheap, with meals averaging about $14 each. But compared to competitors’ on-demand delivery markups and service fees, wasting ingredients from the grocer and the hours of cooking for yourself, it can be a good deal for busy people.

“We see Thistle as part of a movement to make health convenient rather than a high willpower chore,” CEO Ashwin Cheriyan tells me. What Peloton did to shave time off getting a great workout, Thistle does for eating a nourishing meal. It makes the right choice the easiest choice.

Thistle COO Shiri Avnery and CEO Ashwin Cheriyan with their daughter

The idea of a button you can push to make you healthier has attracted a new $5.65 million Series A round for Thistle led by its first institutional investor, PowerPlant Ventures . Bringing the startup to $15 million in funding, the cash will expand Thistle’s delivery domain. Dan Gluck of PowerPlant, which has also funded food break-outs like Beyond Meat, Thrive Market and Rebbl, will join the board.

Currently Thistle delivers in-person to the Bay Area, LA metro, San Diego and Sacramento while shipping to most of Washington, Oregon, Utah, Idaho, Nevada and Arizona. Thistle actually held off on raising more since launching in 2013 to make sure it hammered out unit economics to prevent an implosion. It’s also planning broader meal options, additional product lines and fresh distribution strategies like getting stocked in office smart kitchens or subsidized by wellness plans.

“The reasons that so many food delivery companies have failed likely fall into two buckets: one, a lack of focus on margins and unit economics, and two, premature geographic expansion before proving out the business model,” says Cheriyan. “Thistle makes money similar to how a well-run restaurant would make money — by having strong gross margins, efficient customer acquisition costs and solid customer retention / lifetime metrics. We currently deliver tens of thousands of meals on a weekly basis to customers on the West Coast and our annual average growth rate since launch has been 100%+.”

It’s nice that Thistle hasn’t gone out of business, because I’ve been eating its salads 6X a week for three years. It’s been the most efficient way for me to get healthier and lose weight after a half-decade of ordering takeout sandwiches and then feeling sluggish all day. I legitimately look forward to each one since they often have 20+ ingredients and only repeat every few months, so they’re never boring.

It has helped me keep my work-from-home lunches to about 20 minutes so I have more time for writing. Thistle is one of the few startups I consistently recommend to people. When asked how I lost 25lbs before my wedding, I point to Peloton cycling, Future remote personal training and Thistle salads — none of which require me to leave the house.

Cheriyan tells me, “We wanted the better-for-you and better-for-planet choice to be the default choice.”

Growing out of on-demand

Thistle has already pivoted past the business model burning tons of cash across the startup world. The company started as an on-demand cold-pressed juice delivery service, sending hipster glass bottles of watermelon and charcoal extract to doors around San Francisco. It was 2013, yoga was booming and people were paying crazily high prices for liquified lemongrass. Health made simple seemed like a sure bet to the founding team of Alap Shah, Naman Shah, Sheel Mohnot and Johnny Hwin, some of whom run Studio Management, a family office and startup incubator. [Disclosure: Hwin and Alap Shah are friends of mine, but didn’t pitch or discuss this article with me.]

Thistle eventually straightened things out with a shift to subscriptions and batched delivery under the leadership of the newly added co-founders, Cheriyan and his wife and COO Shiri Avnery. “I came from a family of physicians — both my parents, brother, and enough aunts, uncles, and cousins are doctors that they could start a small hospital,” Cheriyan, a former corporate attorney in M&A tells me. “A common point of frustration was about patients suffering from diet-related illnesses who were unable to make a lifestyle change because it was too hard.”

Avnery, a PhD in air pollution and climate change’s impact on agriculture, had become exasperated with the slow pace of policy change and the inaction of governments and corporations. The two quit their jobs, moved to San Francisco, and searched for a point of leverage for positively influencing people’s diets and interaction with the environment. They teamed up with the founders and launched Thistle v1.

A lack of experience in logistics led to the initial detour into on-demand. But rather than trying to fix the problem with VC money, Thistle stayed lean and discovered the opportunity nestled between Uber Eats and Blue Apron: sending people food they don’t have to eat now, but that takes low or no time to prepare when they’re peckish. Through its app, users can customize their meal plans, ban their allergens, pause deliveries and see what they’ll eat next.

A sample of Thistle 8 meal plans

The unit economics problem most heavily plagued the early on-demand food companies. Food / labor waste and inefficient deliveries were likely the biggest reasons why the economics were unsustainable without venture life support. We know this personally as Thistle started our delivery service as an on-demand company before quickly realizing that the unit economics couldn’t sustain a healthy business,” Cheriyan explains, regarding companies like Sprig, DoorDash and Grubhub. Beyond unsold food, “the margins very likely did not support ordering a $12-$15 single meal for immediate delivery when average hourly driver wages reached $18-20.”

Meal kits were supposed to make dining healthier and cheaper, but they proved too much of a chore and led customers to boxes of ingredients piling up unused. Munchery and Nomiku went out of business while giants like Blue Apron have incinerated hundreds of millions of dollars and seen their share prices sink.

“The meal kit companies fared a little better from a gross margin perspective (due to pre-orders and more efficient deliveries), but suffer most from an easy-to-copy business model. This led to a rise in copycats, and, as a result, heavily rising customer acquisition costs, low switching costs and poor retention,” Cheriyan tells me. “Fundamentally the meal kit companies face another challenge, which is that people have less and less time to cook and are increasingly looking for ready-to-eat options.”

Push-button health

A slower, steadier approach with less overhead, more convenience and fewer direct competitors has helped Thistle grow to 400 employees, from culinary to engineering to logistics.

Still, it’s vulnerable. It may still be too expensive for some markets and demographics. Logistics experts like Amazon and Whole Foods could try to barge into the market. Cloud kitchens without dining rooms are making restaurant food more affordable for delivery. And another startup could always take the gamble on raising a ton of cash and subsidizing prices to steal market share, especially where Thistle doesn’t operate yet.

Thistle could counter these threats by further eliminating delivery costs by selling through partners like office smart fridges where employees pay on the spot, or equipping gym lobbies with more than just Muscle Milk.

One opportunity we’re excited to test is attended and unattended retail — it would be great to be able to pick up Thistle products at your local grocery store, gym or coffee shop,” Cheriyan says. As for offices, “Today’s corporate lunchtime solutions often require a trade-off between health and convenience: either wait in line for 30+ minutes at your favorite salad spot for a healthy option, or opt into catered restaurant meals that leave you feeling sluggish and unproductive.” Thistle could help employers prevent the 3pm energy lull.

The startup’s focus on plant-forward meals also centers it in the path of another megatrend: the shift to environmentally conscious diets. Almost 60% of Americans are trying to eat less meat and 50% are eating meat-alternatives like Impossible Burgers. That stems both from interest in the humane treatment of animals and how 15% of green house emissions come from livestock. But 45% of Americans say they hate to cook. That’s why Thistle makes pre-made meals where meat and egg are optional, but the food is healthy and delicious without them.

In the age of Uber, we’ve acclimated to an effortless life. The new wave of “push-button health” startups like Thistle could finally take the hassle out of aligning your actions in the gym or kitchen with your intentions.

Hot off the press: New tickets to the 3rd Annual Winter Party at Galvanize

Party on, startuppers. We’ve just printed up a fresh batch of tickets to our 3rd Annual Winter Party at Galvanize in San Francisco on February 7. If you haven’t snagged yours yet, don’t wait, because tickets to this event fly off the proverbial shelf. Buy your ticket right now.

Our annual winter soiree features 1,000 of Silicon Valley’s brightest minds, makers and visionaries relaxing over passed canapes and delightful libations. It’s the perfect way to meet your colleagues, expand your network, shake off the winter blues and just have some fun.

Let’s face it — networking works better in a relaxed setting. You never know who you’ll meet at a TechCrunch party — it might be a relationship that takes your business to new heights. Our parties have a history of creating startup magic.

We’re not kidding when we say this is a popular event. Case in point: our demo table packages sold out in a flash. As you swill and chill, be sure to check out the up-and-coming startups showcasing their tech. We have a limited number of tickets left, and they’re going fast.

  • When: Friday, February 7, 6:00 p.m. – 9:00 p.m.
  • Where: Galvanize, 44 Tehama St., San Francisco, CA 94105
  • Ticket price: $85

In addition to networking, comradery and great food and drink our Winter Party comes replete with party games, activities and photo ops. Bring your best karaoke chops and impress the crowd. Oh, and no TechCrunch party is complete without door prizes, TC swag and a chance to win tickets to Disrupt SF, our flagship event coming in September 2020.

Don’t miss out on the 3rd Annual Winter Party at Galvanize on Feb. 7 in San Francisco. Tickets are going fast — get yours now while you still can!

Is your company interested in sponsoring or exhibiting at the 3rd Annual Winter Party at Galvanize? Contact our sponsorship sales team by filling out this form.