Vietnam’s food ordering startup Lozi today announced that it had raised a seven digit funding round from Golden Gate Ventures and Internet media firm DesignOne Japan Inc, proving that this business model can work well in Vietnam.
The development comes after Foodpanda announced the termination of its operations in the country, yesterday.
The exact deal size was not disclosed. However, Lozi said the involvement of the investors will play an important role in expanding its business, paving the way for regional presence.
Lozi will use the money to accelerate the use of its website and mobile app among people, striving to become one of the leading food ordering platforms in Vietnam. It also plans to develop technology solutions that will help connect the restaurants to its users in a better way.
Meanwhile, its competitor – Vietnammm, in an email to DEALSTREETASIA – claimed that it is the largest player in this category in Vietnam.
Golden Gate Ventures will be supporting Lozi in marketing, technology and strategic development, leveraging on its expertise from investments in 35 different companies across seven Asian countries.
Several months ago, Golden Gate Ventures said it had closed $35 million fund and expected to raise $15 million more, for the Southeast Asian startups. Lozi deal marked its second investment in Vietnam, following an undisclosed funding round for mobile internet company Appota.
Jeffrey Paine, the founding partner of Golden Gate Ventures, acknowledged that Vietnam was a tough place for online food ordering service business. What made him interested in Lozi was the team. “The team is crazy. I like crazy founders,” he said.
Backed by the Vietnam Silicon Valley (VSV) project, Lozi had 500,000 subscribers by November end. The company had received an earlier round of funding from the project in 2014 and is now valued at around $2 million, the startup said during the launch of co-working space-cum-incubator VSV Corner.
In October, it had an undisclosed fundraising round, which was, according to Crunchbase, at $10,000.
On Thursday, DEALSTREETASIA reported that Foodpanda announced the shut down of its Vietnam business due to an unhealthy financial situation.
According to a few industry insiders, Foodpanda’s business model did not fit the local taste. However, startups like Lozi or Vietnammm seem to think otherwise.