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Start-ups in F&B sector set to grow: Venture capitalist

Venture capitalist Golden Gate Ventures expects to see more players in this space over the next three years.

SINGAPORE: The food and beverage (F&B) sector continues to attract interest among start-ups in Singapore. Venture capitalist Golden Gate Ventures expects to see more players in this space over the next three years.

One such start-up, Oddle, developed an online food ordering system, which was launched in March 2013, and has since expanded rapidly.

It currently hires 12 people in Singapore and five workers each in Vietnam and Hong Kong, and is looking to add 20 staff in Singapore this year. It recently secured S$1 million in funding which will go towards further regional expansion and product development.

Mr Jeremy Lee, co-founder of The Oddle Company, said: "We have a team in Vietnam and Hong Kong to help us open a new market. The good news is that they are very positive about this pick up and delivery idea, they are able to capture a good amount of clientele in those areas. So recently, my partners travelled to Australia and Taiwan and we are seeing very encouraging results based on the solutions that we showed them."

In the past year, Oddle recorded two million transactions and it now has 350 F&B outlets onboard, including Paul Bakery and The Soup Spoon.

The start-up said it is differentiating itself from competitors, by being more merchant-centric. Oddle provides F&B operators with an order management system and charges them a flat subscription fee per outlet, instead of using the transaction fee model.

Another start-up, GoFresh, has set itself apart from supermarkets by offering what it calls "restaurant-grade" fresh produce which are not readily available at stores.

Its founders started the online grocery site in June last year to expand their business from distributing fresh produce to restaurants, to selling directly to consumers.

Said Mr Julian Lee, co-founder of GoFresh: “Since we started the business, we have seen a 30 per cent month-on-month growth. The online grocer space itself is only taking up 3 per cent of the market; the entire grocer market - in terms of space to grow - is a huge space."

One area that GoFresh is looking at is providing more product information to consumers, such as the type of feed that is fed to the cattle and the ranch they came from. It is exploring the possibility of expanding into Malaysia and Indonesia over the next two years.

Going forward, more start-ups are expected to enter the F&B sector.

Mr Vinnie Lauria, a venture capitalist and founding partner of Golden Gate Ventures, said: “As an investor, I actually want to see competition, because if there is only one player in the market, that is actually a bit of a red flag for us. It says, maybe they are too early in the market. So we are actually looking for a healthy amount of competition.

“That is when companies can differentiate themselves through business models, whether they choose to do warehousing, or be light weight and no warehousing and just pick up from third-parties, so there are lots of ways you can innovate even though you are in the same space."

Golden Gate Ventures said the new players will likely add greater value to the industry by providing more innovative solutions, whether it is warehousing technology or developing software that analyses product packaging, for example.