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Healthy growth helps B2B food e-commerce startup Pepper raise $30 million led by ICONIQ Growth

Pepperan e-commerce platform for food distributors, continues to conquer Sysco and US Foods territory by giving smaller, independent distributors a technology advantage.

The company developed an ordering system specifically for independent food distributors that supports catalogs of more than 100,000 items and enables these companies to launch mobile applications and websites to accept online orders and payments.

Co-founder and CEO Bowie Cheung, who previously worked at Uber Eats, said the company now has 200 customers in a market of 25,000 food distributors. However, Cheung said Pepper wants to increase that by facilitating the relationship between independent distribution and technology.

“These companies, generally speaking, have never been well-served by big broad-line distributors like Sysco or US Foods,” Cheung told TechCrunch. «If you enjoy the variety and vibrancy that non-chain restaurants bring to your community, then you already understand the importance of that independent distributor, and that is very much the customer we have always served and continue to serve today.»

Pepper does this by developing dozens of new product features each year that leverage advanced technology, such as generative artificial intelligence, to improve experience, efficiency and results. The company’s evidence includes a 23% increase in customer sales, 93% customer retention and the ability to save over 10 hours of work per week per sales representative, Cheung said.

There are some players in the e-commerce food distribution space with Pepper including Choco, which developed a sustainable food system for restaurants and suppliers; Cut+Dry and Anchovi, Dot Foods’ white grocery e-commerce platform.

Where Cheung believes Pepper is different is that all of those competitors have taken a strategy focused on the download-the-app market. There is no such thing as a «Pepper app,» but a distributor-oriented strategy is needed, he said. This means that the distributor’s brand identity is front and center instead of Pepper’s.

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Customers seem to like it. Over 140 customers are double the number of customers when Pepper launched Series A of $16 million back in 2021

Since then, the company has become a full-stack payment processor. This makes it easier for operators to pay distributors. He also «reimagined» what modern customer relationship management and copilot software should look like for a sales rep working in food distribution so they can be more productive. In addition, the company has built an advertising platform that allows distributors to run marketing campaigns with their suppliers to promote existing products.

Cheung was not specific about Pepper’s revenue, but shared that it has grown more than 20 times. He also did not disclose the company’s valuation, but said it was «a step up from our last round.»

Investors also like Pepper. On Monday, the company announced a $30 million Series B funding round led by new investor ICONIQ Growth and with participation from another new investor, Harmony Partners, and existing investors in Index Ventures, Greylock and Imaginary. That gives the company about $60 million in total funding.

«ICONIQ Growth is the perfect partner for us,» said Cheung. “Their track record of supporting large, successful vertical software companies and industries that the consumer world wouldn’t necessarily consider really resonated with us. Food distribution is one of those industries.”

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