In what seems to be a distressed sale, Delhi NCR-based omnichannel meat brand Good To Go is acquiring Chennai-based meat delivery startup TenderCuts.
Good To Go said the acquisition would also include Happy Chops, a seven-month-old tech platform launched by TenderCuts that claims to offer an online storefront and procurement support to local butcher shops. Happy Chops was launched by TenderCuts earlier this year.
Good To Go didn’t disclose the financial details of the deal, but Inc42 has learnt more details about the downturn that has hit TenderCuts since its last fundraise during 2021’s peak funding season.
Cutbacks At TenderCuts
Inc42 has learnt from sources that TenderCuts shut its operations in several pockets in Chennai, the only city it currently operates in, over the last few months due to scarcity of funds.
Multiple sources told Inc42 that the startup had a very high burn rate. Its failure to secure fresh funding resulted in it shutting its operations in Bengaluru and Hyderabad last year.
It also fired nearly 65% of its workforce after shutting its operations in the two cities.
Despite these struggles, TenderCuts launched Happy Chops earlier this year. However, the last three-four months were very difficult, sources added.
Commenting on the state of the startup, a senior TenderCuts executive told Inc42, “Acquisition was the only way out as it (TenderCuts) was unable to secure a Series B funding round.”
Social media is filled with irate reviews from dissatisfied TenderCuts customers, pointing out that the Stride Ventures-backed startup had issues when it comes to deliveries and availability of products.
Having spoken to sources at TenderCuts, Inc42 contacted Nabard’s NABVENTURES yesterday (Friday, September 1), a key investor in the company, for a comment on the distressed situation at TenderCuts. Less than 24 hours after this communication, TenderCuts publicly announced the acquisition by Good To Go.
Stride Ventures declined to comment directly about the state of operations at TenderCuts despite multiple attempts to reach its founder Ishpreet Singh Gandhi.
The press statement on the acquisition is mum on whether investors at TenderCuts saw any returns from this transaction.
If these troubles weren’t enough, TenderCuts has seen the exit of R Venkkatesan earlier this year. Venkkatesan is mulling entering the real estate sector for his next business, as per his LinkedIn profile.
Founded by Nishanth Chandran, the startup elevated three senior employees Sasikumar Kallanai, R Venkkatesan and Varun Prasad Chandran as cofounders in 2021. Sources indicate that Chandran is also likely to quit the startup after the acquisition, along with the other cofounders.
TenderCuts Deep In The Red
Founded in 2016, TenderCuts offers freshly cut meat and seafood to customers through neighbourhood stores, which cater to both walk-in customers as well as online shoppers. Over the years, the startup expanded its product portfolio, adding eggs, spices, ready-to-cook products, among others.
The startup competes with unicorns such as FreshtoHome and Licious as well as marketplaces such as BigBasket and a host of other players selling through quick commerce apps.
TenderCuts claimed to have a network of 50 retail stores in Chennai and Bengaluru after raising over $19 Mn in funding. It raised $15 Mn in its Series A round led by Paragon Partners and NABVENTURES. In 2021, it raised $3.5 Mn in debt funding from Stride Ventures.
Worryingly, the company saw a huge jump in loss in FY22. The total loss of INR 126.8 Cr was 4X higher than the INR 30.4 Cr in FY21, but revenue only grew by 1.6X to INR 130.9 Cr in FY22 as compared to INR 78.1 Cr in FY21. Overall expenses ballooned by over 2.4X YoY to INR 259 Cr in FY22. Most of these went towards purchase of stock, while advertising costs also ballooned in FY22.
The startup also roped in Prakash Raj as brand ambassador even as it struggled to boost the revenue and improve its unit economics.
The poor financial and operational state of TenderCuts mirrors the state of many other meat delivery startups, where Licious and Freshtohome are dominant forces. Licious has raised over $400 Mn, while FreshtoHome has secured over $256 Mn in funding since inception, highlighting the need for capital to scale up this segment.
Despite this, Licious and FreshtoHome continue to be loss-making as per their FY22 financials — INR 856 Cr and INR 480 Cr, respectively.
TenderCuts’ acquirer Good To Go reported INR 9 Cr in revenue in FY22, with a razor thin profit of INR 1.1 Lakh (Less than 0.01%).
It looks like TenderCuts is the latest casualty of this intense competition and opex burden for meat delivery. It’s not clear whether Good To Go would retain the brand identity that TenderCuts has invested in building over the past few years. The announcement, sent soon after Inc42’s questions about the downturn at TenderCuts, was thin on any details in this regard.