Meal kits have had a rush of interest in recent months, with people turning to them to vary the pace of (and in some cases, completely replace) making meals at home, or ordering take out, at a time when many of us are spending a lot of time at home. Now a startup that has combined the concept of meal kits with that of smart ovens to do the cooking is announcing some funding to help expand its business.
Tovala, maker of a smart convention/broiling/steaming oven designed to automatically cook a variety of low-labor meal-kit-based meals also created by the startup (alongside cooking other food), has raised $20 million.
It's a Series B led by Finistere Ventures -- the VC that specialises in disruptive food-related businesses -- with participation also from Comcast Ventures, OurCrowd and Rich Products Ventures; as well as previous backers Origin Ventures, Pritzker Group Venture Capital, Crate & Barrel founder Gordon Segal, New Stack Ventures and the University of Chicago. It brings the total raised by the company, which was originally incubated at Y Combinator, to just under $42 million.
Chicago-based Tovala is not disclosing its current valuation, but founder and CEO David Rabie confirms that it is materially higher than its previous valuation. (For some context, PitchBook notes that it was a modest $38 million as of last May when it raised a Series A extension, but Rabie would not confirm the amount.) It comes as the startup has crossed 1 million meals sold to its customers since launching in 2017, although it's not disclosing how many of its ovens it has sold.
The bulk of Tovala's growth has been in the last 10 months, Rabie said: "Our growth has been dramatic since last year, and COVID-19 has accelerated it in every way."
Rabie has worked at a variety of food companies over the years, among other jobs, including a short stint at Google, and he describes himself as having "a passion for cooking" instead of ordering take-out when it comes to eating at home. All the same, he said that he started Tovala in a period when he was especially short on time. So short, in fact, that even a typical meal-kit service that requires some chopping and cooking and usually around 20-30 minutes of preparation was too much time for him to give over to the process.
Around then, he also noticed that there wasn't a service that had thought to combine the hardware of a handy "smart" oven with services around it in the area of delivering meal kits. "There weren't smart ovens but there were smart things, and there were meal kits," he said, "but nothing that combined those, nothing that hit the nail on the head."
Tovala's basic premise is that it provides a complete meal, where everything is ready-chopped, marinated and blended, the work you do as the customer is simply to open packets, add things to each other in less than a minute in the pre-supplied baking trays, scan QR codes using the Tovala app, and let its oven then do the rest.
The oven itself sells for $299 if you buy it on its own, or $199 if you commit to ordering meals six times over the next six months (which sell currently for $11.99 per single serving).
While there is a simplicity in the basic value proposition of selling an oven designed to cook the meals you have pre-prepared and sell along with it, that business alone is highly competitive. Considering just the many options of "short-cutting" cooking from scratch, you have very direct competitors like Suvie, which also makes ovens and meal kits; various meal kit companies like Blue Apron and Hello Fresh; a plethora of ready-meals you can microwave, boil or bake from grocery stores and other places; plus the many businesses out there doing deliveries of take-out food.
That's where Rabie's approach considering other ways of extending Tovala's business become interesting.
The oven, for starters, can also be used as a convection/broiling/steaming oven for anything you might want to cook, but it has also been pre-programmed to cook some 750 other ready-meals (such as Trader Joe's burritos) by way of scanning codes into the Tovala app. I asked, but as of yet Rabie said Tovala does not have any plans for a "Nespresso"-style approach of working with any other meal kit providers to make meals that can be cooked in its oven.
Tovala's also done one "pop-up" chef experience where a well-known Chicago cook created a few meals for Tovala, and that proved popular and might be repeated with others, Rabie said. And it's not all focused on its own hardware. Last year the company partnered with LG so that people could buy its ready-meals to be cooked in LG smart ovens.
It also counts the chicken giant Tyson as an existing investor. For now, the two have yet to collaborate on meals for the Tovala oven, Rabie said, but you can imagine how it and others (such as Finistere portfolio company Memphis Meats) might craft specific dishes for the Tovala oven, creating further revenue streams for the startup and more use cases for people who fork out to buy its hardware.
On the subject of the hardware: Considering how so many startups built around "disruptive" hardware have stumbled over the years because of the unit economics, supply chain issues and other complications that fall under the maxim of "hardware is hard," I asked if it's been a stumbling block at all for Tovala. No, is the short answer.
"It’s a misconception that hardware is hard or expensive," he said. "It’s always more expensive than software, but really it depends on how you go about it." Some companies might spend a fortune on designing a product, "millions or tens of millions" on prototyping and more before ever getting anything out into the market.
"We did not go down that path," he said. "We launched in 2017 having raised a few million dollars to build the oven and the food infrastructure. There is a way to do it without having to spend millions." Wisely, he added that the trick is to scale with thoughtfulness: "Hardware fails when companies lose sight of their value propositions, and they forget what problem they are trying to solve."
To that end, the funding is unlikely to be used for more development for now on the oven itself, he added.
“Tovala uniquely sits at the intersection of trends in the smart home and meal kit spaces: Meals enabled by an automated device, delivering convenience without compromise. We recognize Tovala’s potential to own the kitchen countertop and look forward to being part of their expansion journey as we increase our investment in the food space,” said Arama Kukutai, co-founder and partner at Finistere Ventures, in a statement. “Tovala demonstrated substantive growth and industry-leading retention even before the current shift in consumer food delivery models, and we think the company is poised to lead the reinvention of the food delivery market as it matures.”