Nigeria’s YC-Backed Chowdeck Secures $2.5 Million Seed Funding To Fuel Growth – urbangeekz

Nigeria’s on-demand delivery platform, Chowdeck, has raised $2.5 million in seed funding to optimize its operations and support expansion into more cities nationwide.

YCombinator, Goodwater Capital, FounderX Ventures, HoaQ Fund, Levare Ventures, True Culture Funds, and Haleakala Ventures were some of the investors who participated in the round. 

The seed round attracted founders like Simon Borrero and Juan Pablo Ortega (Rappi), Shola Akinlade, and Ezra Olubi (Paystack). Sudeep Ramani (Sportybet), Ayo Arikawe (Thrive Agric), and Karthik Ramakrishnan (Amazon) also participated as angels.

A recent report revealed that the average Nigerian spends $62 (₦48,186) monthly on groceries. However, online food delivery services are becoming increasingly popular. Increased smartphone use, internet penetration, improved payment systems, evolving consumer preferences, and various other factors are all driving this trend.

For example, heavy traffic in major cities makes shopping for groceries, meals, or other goods challenging, increasing the attractiveness of delivery services that can save time. This growth trajectory is poised to continue as many challenges that hampered previous attempts at providing on-demand delivery services are fixed.

Founded by Femi Aluko, Olumide Ojo, and Lanre Yusuf, Chowdeck is a leading food delivery service operating out of Africa today. It allows consumers to buy food and have it delivered to their doorstep in 30 minutes, on average.

Since launching in October 2021 after the COVID-19 lockdown in Lagos, Chowdeck has acquired more than 500,000 users and more than 3,000 riders that serve 8 Nigerian cities (Lagos, Abuja, Ibadan, Port-Harcourt, Ilorin, Benin City, Abeokuta, and Asaba). 

The startup has also partnered with a wide range of leading quick-service restaurants, such as Chicken Republic, Burger King, Bukka Hut, and more, to drive sales and provide logistics infrastructure and other services to enhance customer experiences.

The startup’s delivery system relies on geotagging. It offers diverse vehicle options, from bicycles to motorbikes, and enforces strict regulations on vendors and riders.

Chowdeck also uses automated processes to streamline customer-rider connections, utilizing in-house data for daily demand forecasting and required supply assessment.

Chowdeck’s New $2.5 Million Funding

This new funding will enable Chowdeck to strengthen its market leadership in these cities and lay the groundwork for further expansion into other Nigerian cities.

Speaking on this funding, Femi Aluko, CEO and co-founder of Chowdeck, said, “We know that Nigerians love good food, and we just want to make it as easy as possible for them to access the food they desire. Chowdeck was birthed to fulfill this purpose, and we are committed to delivering truly excellent experiences for our customers, vendors, and riders.”

“We are pleased with our success and excited to have raised these funds to enable us to replicate that success in more parts of Nigeria and add value to our customers, vendors, and riders in as many ways as possible, he continued.” 

June Angelides, Partner at Levare Ventures, said, “Chowdeck has quickly become a household name across Nigeria, priding itself on very high execution standards. They are addressing a large and complicated problem, especially in Africa, delivering goods at record speed.” 

“I am excited that they have proven the opportunity exists beyond restaurants and supermarkets. The team has secured landmark partnerships with Shoprite, Chicken Republic, and KFC, a sign of grit. Their customers love them, and their riders love them. There’s so much more to come, and I’m excited to be with them on the journey, Angelides stated.”

As of March 2024, Chowdeck crossed $1.7 million (₦2.4 billion) in monthly gross merchandise value (GMV), a 140% increase from the value it reached in October last year.

With this new capital injection, Chowdeck plans to solidify its dominance in existing markets before expanding to new cities. While immediate expansion isn’t on the cards, CEO Aluko confirmed to Bendada their intention to enter new Nigerian cities before the year’s end. Specific locations, however, remain undisclosed. “We’re data-driven,” he explained. “We conduct surveys and other research to identify the optimal markets for expansion.”

Additionally, the on-demand delivery service is also committed to leveraging the investment to better the experience for its customers, vendors, and particularly delivery riders, whose earnings currently exceed three to five times Nigeria’s monthly minimum wage, Aluko noted.

“After a few months of building Chowdeck, it was clear the level of impact we were going to have and teething problems we could solve at scale in the country, especially around earnings,” Aluko told Rest of World. “For many people, including us, it was interesting to see our riders getting paid between $83-$170 monthly (₦100,000-200,000) regularly and profitably.”