Lagos-based food delivery startup Chowdeck has secured $2.5 million in seed funding. The round was led by Y Combinator and Goodwater Capital, with participation from FounderX Ventures, HoaQ Fund, Levare Ventures, True Culture Funds and Haleakala Ventures. Angel investors including Simon Borrero and Juan Pablo Ortega (co-founders of Rappi), Shola Akinlade and Ezra Olubi (co-founders of Paystack) also participated.
Chowdeck plans to utilize the investment to bolster its operational efficiency, expand its reach to new Nigerian cities, and enhance the user experience for customers, vendors, and delivery riders.
Why Investors Backed Chowdeck
Several factors likely influenced the investors’ decision to back Chowdeck:
- Promising Market: Nigeria’s food delivery market is projected to reach $2 billion to $3 billion by 2032, fueled by the country’s high food consumption rate (nearly 60% of household income) and growing online shopping culture.
- Focus on Unit Economics: Unlike competitors reliant on heavy discounts, Chowdeck prioritizes sustainable business practices with minimal discounts, ensuring long-term profitability.
- Strategic Advantage: Chowdeck leverages learnings from previous market entrants (like Jumia Food and Bolt Food exiting the market) and implements a data-driven approach to optimize delivery logistics and rider allocation (including geotagging, diverse vehicle options, and strict regulations for vendors and riders).
- Experienced Team: The company’s founders possess experience in the tech industry, particularly Femi Aluko, a former engineer at Paystack.
- Strong Growth Trajectory: Chowdeck boasts impressive user growth, exceeding 500,000 users (with over 100,000 active), and processes over 14,000 daily deliveries.
Y Combinator is a renowned startup accelerator based in Silicon Valley, California. They provide funding, mentorship, and resources to early-stage companies. Y Combinator has backed numerous successful startups across various industries, including tech, e-commerce, and healthcare.
Goodwater Capital is a venture capital firm co-founded by veteran investors Chi-Hua Chien (formerly of Kleiner Perkins) and Eric Kim (formerly of Maverick Capital). They focus on early-stage investments and have a track record of supporting innovative startups. Goodwater Capital has invested in 79 startups so far
FoundersX Ventures is a cross-stage venture capital firm based in Menlo Park,. Silicon Valley with focus on AI and data analytics as growth engine.
True Culture Funds and Haleakala Ventures are US-based VC firms, while Levare Ventures and HoaQ Fund are based in Lagos, Nigeria and Ireland respectively.
A Look At Chowdeck
Founded in October 2021 by Femi Aluko, Olumide Ojo, and Lanre Yusuf, Chowdeck is a Lagos-based on-demand delivery platform offering convenient food delivery within an average of 30 minutes. The startup operates across eight Nigerian cities (Lagos, Abuja, Port Harcourt, Ibadan, Benin City, Ilorin, Abeokuta, and Asaba) and has expanded its services to include grocery and pharmacy deliveries through a learning from its flagship business.
Chowdeck differentiates itself by prioritizing delivery speed and offering competitive rider compensation, exceeding Nigeria’s minimum wage by three to five times. The company currently boasts over 3,000 riders and 1,500 active vendors across its food, grocery, and pharmacy delivery verticals. In 2023, their annual gross merchandise value (GMV) surpassed ₦7 billion ($5.8 million), with a monthly GMV reaching ₦2.4 billion ($2 million) by March 2024. Lagos generates 80% of Chowdeck’s volumes. Their revenue stream includes vendor commissions, service fees, surge charges, and delivery fees, with a take rate of 24%.
Chowdeck also offers a relay service for intra-city package movement in Lagos.
