India’s FreshToHome raises $20M to grow its fish, meat, vegetable and milk e-commerce platform

FreshToHome, a Bangalore-based e-commerce startup that sells fresh vegetable, fish, chicken and other kinds of meat, has raised $20 million in a new financing round as it looks to expand its footprint in the nation.

The Series B round for the startup was led by Iron Pillar, with Joe Hirao, the founder of Japan’s ZIGExn, also participating. The startup, which closed its $11 million Series A financing round three months ago, has raised $33 million to date.

FreshToHome sells “100 percent” pure and fresh vegetables and meat in Bangalore, Mumbai and Pune — the latter two of which it recently entered. It says it does not add any preservatives or other chemicals to prolong the life of the produce. (Typical meat sold by a retail store is riddled with chemicals and could be months old.)

Unlike most other marketplaces, FreshToHome has built its own supply chain network, which gives it better control over quality and delivery of the food items. It uses trains and planes to move inventory, and has become one of the biggest clients of several local airlines.

The startup sources vegetables and fish directly from 1,500 fishermen and farmers across the nation. It uses an app to negotiate with farmers and fishermen.

It continues to expand its control over all aspects of its business. “Today a large part of our poultry comes from institutional farmers. Now we are going a step ahead and processing the chicken at the slaughtering level ourselves,” Shan Kadavil, CEO of FreshToHome, told TechCrunch in an interview.

FreshToHome is able to deliver the perishables on the same day and as soon as up to two hours, Kadavil said.

The startup also began operations in UAE recently and has opened physical stores in Bangalore and Chennai.

FreshToHome has amassed 650,000 customers — up from 400,000 in late May — in 10 cities in India, and recently started to sell milk in Bangalore, another market segment that remains largely unstructured in the nation. Every day it receives 14,000 orders, and processes 20 tons of fresh food.

It recently crossed $30 million in annualized direct to consumer sales, which makes it the largest e-commerce platform serving this category. It is seeing 30% month-to-month growth, said Kadavil, who has previously managed tech support for Support, and India operations for gaming firm Zynga.

And that growth has helped the startup attract some attention. Several major players in the nation, including Amazon India that recently expanded to include perishable category and Flipkart, have held talks with FreshToHome to acquire some stake in the startup, a person familiar with the matter told TechCrunch.

And there is a big opportunity in the space. The cold-chain market of India is estimated to grow to $37 billion in next five years.

In addition to directly procuring its supplies from farmers and fishermen, FreshToHome also serves as a micro-VC, giving them access to some money upfront and resources to produce more from their farms. It also gives them an assurance that it will buy back their produce.

Kadavil founded FreshToHome with Mathew Joseph, a veteran in the industry who has dealt with fish export for more than 30 years. Joseph started India’s first e-commerce venture in fish and meat, called SeaToHome, in 2012.

FreshToHome will use the fresh capital to expand its network of contract farmers, and add 200 to 300 tons of additional produce each month.

In a prepared statement, Anand Prasanna, managing partner of Iron Pillar, for which it is the first investment in food-tech space, said, “FreshToHome’s brand proposition has been to provide 100% fresh food with 0% chemicals — not an easy thing to achieve in India at a large scale. By smartly using big data and machine learning, they have created a sustainable supply chain, which offers a fair price to consumers, fishermen and farmers, for their premium produce… We love companies that solve such hard issues in large market segments in India through unique tech enabled moats!”