RedMart, an online grocery service based in Singapore, announced today that it has closed a $5.4 million bridge round led by Facebook co-founder Eduardo Saverin; Property Guru founders Steve Melhuish and Jani Rautiainen; Meng Weng Wong, the co-founder of incubator JFDI; Wee Teng Wen, founder of The Lo & Behold Group; and Lion Rock Capital. The round was oversubscribed and brings RedMart’s total raised so far to $10 million.
Co-founder and CEO Roger Egan told me that RedMart’s new funding will be used to build its logistics infrastructure and technology to support the company’s growth. Since RedMart raised its Series A in July 2013, Egan says its revenue has grown 20% to 30% per month. He declined to disclose current financial or user metrics, but when we last wrote about the company six months ago, it had just made $5 million in annual sales. The company has also grown to 115 employees, up from 75.
RedMart is currently in the process of raising a Series B round, which is expected to close by the middle of the year, and will be used in part to fund the company’s expansion into other cities.
“We were going to do a smaller bridge round, but we were growing so fast we were running out of warehouse space and didn’t have enough delivery trucks,” says Egan. “We needed to expand faster than we thought.”
He describes RedMart as a “tech and logistics company that does grocery retail.” It is important for the startup to get order fulfillment right because as a grocery retailer, a typical RedMart order might include 22 to 26 items. The company currently has 16 delivery trucks and has developed software for Android-based devices that let drivers manage their routes, contact customers, and record delivery times.
Before raising its Series B round, RedMart plans to stay put in Singapore, which Egan says has grocery store industry that is worth a total of $5.9 billion. In a city where opening an e-commerce company is preferable to brick-and-mortar locations because of high real-estate costs, RedMart competes with other online grocers like Order Online, FairPrice, and several smaller organic food companies.
Egan says RedMart differentiates with lower prices, a wider selection of products, and same-day delivery. He wants to make sure its logistics infrastructure and technology is solid before expanding into other markets.
“Webvan’s biggest mistake was expanding too quickly before they had the business model right and all systems technologies in place,” says Egan, referring to the online grocery business that went bankrupt in 2001.
“It’s just much more time and effort to fix two things at once rather than get one right and replicate it really quickly,” he adds. “We want to build a whole operation and get the systems in place. We’re almost done with doing that and then we can copy and paste our internal operation into another city and adjust for cultural and last-mile delivery differences.”
In a statement, Saverin said, “I believe that time-starved consumers will increasingly value convenience in purchasing their daily essentials. The logistics and technology platform the RedMart team is building extends far beyond selling groceries in Singapore. The founders’ ambition is boundless, their execution near flawless and I am excited to help them to realize their vision.”
