Malaysian food delivery startup Dah Makan is working on a larger funding round with global venture capital firms as the firm looks to upgrade technology and improve the user experience.
The health food delivery startup had earlier raised $320,000 from two angel investors in a seed round over an year ago since when it has grown to cover around 80 per cent of the Klang Valley region in Malaysia and has also crossed its 100,000th delivery.
“We are right now finalising a larger round with several global VCs with extensive experience in e-commerce and consumer brands. It’s very important to have the right investors on board as they can have significant influence on the future of a company,” founder and CEO of Dah Makan Jonathan Weins told DEALSTREETASIA in an interview.
Without divulging specifics about the funding, Jonathan said that an announcement on the funding may come in a few months.
He said that the company is investing heavily into its team and technology. In fact, just last month they released a completely new version of its apps and implemented a new backend system with a new routing algorithm to manage the delivery fleet.
Before Dah Makan which means in Malay, Have you eaten?, Jonathan along with his co-founder had launched foodpanda in Hong Kong. Other co-founders of the company are Jessica Li and Christian Edelmann.
How is the business looking so far. Please give us some numbers to explain the growth that you have seen in the past year or so.
We first started completely bootstrapping with us co-founders pretty much doing everything ourselves from sourcing, cooking to delivering. The goal was to really understand the customer experience as well as the business model. Starting from 4 or 5 orders per day, word of mouth spread fast and we quickly reached our first milestone of 100 orders per day a few months later.
A lot of things have changed since the early days: we had to move kitchens three times to expand capacity and have increased our team with culinary and tech talent. Some months back we delivered our 100,000th meal to a customer, a big milestone.
New developments on our logistics technology have allowed us to significantly expand our delivery area. We can now cover around 80 per cent of the Klang Valley which is a massive market opportunity considering that we aim to serve people lunch and dinner everyday.
Is the Malaysian market good enough to sustain this growth ?
We believe the market is ready for a more sophisticated solution than the existing food delivery. It first took awhile but now the app adoption has been rapid. Last week, app orders exceeded web orders for the first time.
You had raised $320 000, from two angel investors in the seed round. I understand you may be currently working on another funding round. Could you give us the size/range that you are looking at and is it a local or overseas investor?
Before Dah Makan, my co-founder and I had launched foodpanda in Hong Kong. However, coming to Kuala Lumpur, we didn’t have any network here which obviously didn’t make it easy to get investors despite our industry experience. Especially in the first rounds, it’s the trust that you build up with a potential investor so we are grateful to have won the support from the angel investors who shared our vision.
The funds from the angel rounds were mainly invested to build up our routing technology as well as laying the foundation for scalable operational processes. There is a huge difference between delivering 100 or 1,000 orders a day.
We are right now finalising a larger round with several global VCs with extensive experience in e-commerce and consumer brands. It’s very important to have the right investors on board as they can have significant influence on the future of a company.
What will the funds be used for?
We invest heavily into our team and technology. Last month we have released a completely new version of our apps and implemented a new backend system with a new routing algorithm to manage our delivery fleet. There are a lot of amazing new features in the pipeline that will drastically improve the user experience. Our goal is to build the best food delivery experience globally so we are expanding the team with various roles, especially on the technology and product side.
What is your growth strategy? Are you looking at expanding into newer markets?
Our main focus is still on Kuala Lumpur as we are determined to further improve the ordering experience. We have seen too many internet companies expanding too fast across multiple markets and then being threatened by new companies with a better product. We are working day and night to build the best user experience and a highly scalable backbone to support the fast growth.
Also, our business model highly benefits from economies of scale, meaning all costs go down drastically the more orders we produce and deliver. We want to increase that scale as much as possible as we can then pass on those savings to our customers to make high quality, conveniently delivered food even more affordable.
Outside of Klang Valley, we are looking at the large metropolitan areas across the region and will launch new markets in 2017.
Do you believe the food delivery business has become competitive with too many players. How does Dah Makan stand out from the crowd?
Our vision is to make food delivery an everyday choice and to replace cooking at home or take away food from restaurants. Family structures have changed quite a bit over the last decades and all of us have become more busy at work as well as living more active lifestyles.
All those changes have made it quite hard to eat well everyday and many people have to resort to unhealthy fast food which has visible health impacts on the general population. We want to change this and make tasty food that is also healthy and importantly, more convenient than fast food.
We actually don’t see ourselves to be in the food delivery business as we don’t compete with Domino’s or your local restaurant delivery such as foodpanda. Most of our customers have never ordered food delivery before and the behaviour is very different.
Hopefully, you are not eating Domino’s everyday, but the majority of our customers eats more than 2-3 meals per week from us. Domino’s is delivering close to 10,000 pizzas a day in Klang Valley alone and we want to serve at least 4 times as many customers per day.
In the long run, we want to democratise high quality food in the same way Ikea has democratised designer furniture or Uniqlo has democratised quality fashion. If you see it from this perspective, the current food delivery market is really just a tiny fraction of our potential market.
Being in charge of the entire value chain from chefs to delivery may be a tedious work. Have you outsourced any of these services or hope to do so more in future?
Of course as a startup you need to maximise the use of all resources that you have so we always ask ourselves what should be our core competencies and what could we outsource. We try to outsource everything where we don’t believe that we can add much value.
For instance, we outsource most of the administrative and support work because there is nothing particular that we could do better about it than a specialised service provider.
However, the easiness of a task has never influenced our decision to outsource vs. to in source. There are a lot of things that we are currently doing which are extremely hard to do. But if those things add a lot of value for the customers then we will take on the challenge.
That is also why right from the beginning we have set up our own kitchen and have developed our own logistics technology. Our routing algorithm is trying to solve the traveling salesman problem – one of the hardest problems in computer science. That is obviously not easy, but once you nail it you have a huge competitive advantage so we took on the initial pain knowing that it is one of the main value drivers for our customers in the future. We don’t take shortcuts.