Deal focus: India’s Licious cuts in a heavyweight

When asked what macro themes are likely to alter the growth trajectory of an internet consumer and logistics company serving domestic markets in India, few investors would evoke the aging and depopulation trends in Japan. But in the case of meat delivery start-up Licious, this appears to be coming together.

The company has secured a $25 million Series D round this week led by Japanese food and logistics conglomerate Nichirei with support from a number of existing backers including Vertex Ventures. Nichirei is known to be on the lookout for overseas partners that can help it expand while the overall consumer base shrinks back home. It approached Licious within weeks of its Series C, which also raised $25 million in September.

The vast majority of the Series C money was still unspent when Nichirei came knocking, but Licious couldn’t pass up the opportunity. The Japanese giant is likely to be of little service in Licious’ ongoing marketing efforts within India, but its knowhow related to managing labor shortages in Japan through automation and operational efficiencies could inform the company’s next stage of domestic expansion.

“If it was anybody else, we would have said, ‘thanks but no thanks, we’ll see you in a year when we’re ready to raise the next round,’” says Ben Mathias, a managing partner at Vertex. “But because they’re such a strong strategic and know so much about the space, we basically took a call to let them onto the cap table. It’s not because we needed the money. We just wanted to tap their expertise.”

Founded in 2015, Licious operates an online meat and seafood ordering service that sources products directly from farmers and distributes them to end-consumers via platforms such as BigBasket and Amazon. It currently operates across three cities, Delhi, Bangalore, and Hyderabad, and plans to be in Mumbai, Pune, and Chennai by the end of the year.

Hygiene is the main problem solver in this business model. Neighborhood meat shops and butchers have a bad reputation for cleanliness in India, and professionally run supermarkets are known for being inconvenient and poorly stocked. In order to sell product via Amazon, Licious had to become the first Indian meat and seafood company to win FSSC 22000 certification, one of the highest global food safety standards.

Farm-direct meats are delivered to a central processing center by 4am every day and packed by 7am at several dozen distribution centers. Anything that isn’t sold is discarded. Every step of the supply chain maintains a temperature below 4 degrees centigrade, including specially refrigerated delivery scooters. “They’re basically building India’s first cold chain,” explains Mathias. “It’s not a marketplace – it’s a full stack offering.”

India’s online food thesis has proven popular with venture capitalists since it combines a number of sturdy socioeconomic drivers including increased internet penetration and rising affluence. Competition between a growing pool of vegetable and general grocery players is therefore expected to get fierce. Meat, however, is seen as a distinctive, bigger-ticket subset that could yield unique opportunities.

“The Indian market is moving towards online grocery shopping, and that will soon become a de facto standard, just like e-commerce is becoming the main way of shopping for people in the higher levels of income,” says Mathias. “Meat is also tied to income level, but as the per capita income of the average Indian goes up, the frequency in meat consumption will also go up.”

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• Topics
• South Asia
• Technology
• Consumer
• Expansion
• India
• TMT
• Logistics
• Agriculture
• Vertex Management (II)