Andreessen Horowitz is partnering with Snackpass for its Series A, where we’ll be working with co-founders Kevin Tan, Jamie Marshall, and Jonathan Cameron. The company was built from their dorm rooms with the goal of letting anyone order food ahead of time for pickup at local restaurants. Since rolling out in 2017, it has seen incredible traction with consumers, local restaurants, and franchises around the country. We are excited to be part of the journey!
Snackpass launched at an important moment in the intersection of technology, food and restaurants, and consumers. Food delivery apps, one pillar of the story, have unlocked a $100B billion dollar market. But we think that’s just the beginning. For consumers to get access to a wide selection of affordable, convenient, and delicious food on an everyday basis, they need access to multiple options—especially when delivery can be expensive or inconvenient. Yes, there are and will be apps that bring groceries and meal kits when people want to cook. There will also be apps for easy and fast food delivery. Snackpass fills another big need: Open an app, check out all the nearby places to grab coffee, get an ice cream, pick up a sandwich—small, everyday orders that you might not want to have delivered to you because of costs and tips—and get it without waiting in line.
Takeout is an important market because it’s not only very large – but its extremely fragmented, with lots of sole-proprietorships and small businesses. Take out drives meaningful sales to restaurants of all types – with consumers increasingly expecting to order ahead for their food. For the average restaurant, 59% of all their orders from millennials alone are said to be ordered for takeout!
From my first meeting with Kevin and the team, it was the product experience that really stood out. Snackpass is easy to use, but it also aligns with the startup’s launch strategy of targeting college students and campuses. The product integrates into meal plans and targets high-frequency anchor establishments across campuses — whether that’s smoothies, boba drinks, or tacos — to create a magnetic draw for students. They’ve built a fun user experience with gifting, social rewards, and a feed of who’s eating what. In creating a social experience around food, Snackpass has created something rare and special among startups: network effects.
All of this careful work has won over college students, which has historically been an incredibly tough audience to crack. It’s tough because there’s a lot of competition and noise, as well as deep seasonality to their engagement. But when it works, it works. Companies like Tinder, Snap, and Facebook started by engaging this audience, then catapulted into the mainstream with long-lasting and meaningful businesses. We aspire to see Snackpass do the same here. Snackpass has grown impressively from their home market at Yale University to dozens of campuses across the country—often achieving 75% adoption in the student body within just a few short months.
Every marketplace product has at least two sides to the story, and for Snackpass, it is the story of the small, local, mom-and-pop restaurants and coffee shops near campuses. As you might imagine, it’s not easy to thrive as a business in an era of increasing change: in food trends (and fads), heightened social media scrutiny, and the convenience of ordering via apps. At the same time, technology also provides a tremendous opportunity to engage and retain customers. There is upside in being able to use push notifications to do “flash sales” of new items or to launch new restaurants. Snackpass partners closely with local businesses to help them succeed in this new era. The company uses its social reward programs to bring new customers to restaurants, manage the rush during peak hours, and offers analytics for restaurants to better retain their customers. Snackpass charges a small fraction of every order—far less than delivery—making it an affordable and effective program for small local restaurants to adopt. The company has signed up many of the most beloved local restaurants and franchises near colleges, and we’re excited to see what comes next.
Kevin, Jamie, and Jonathan are the ideal group of founders to be taking this on. Our investment in Snackpass is as much of a bet on them as the business. They are the authentic voices of the customer, having started Snackpass while in college with unique insights from their friends and peers. In the early years, they were the epitome of hustle, building the app, selling it to restaurants, and growing the team. They also assembled an impressive group of employees and investors around them with deeply relevant expertise in food, rideshare, SMBs and marketplaces. a16z is excited to be working with Snackpass and to have a front-row seat to the company’s expansion in the coming years!
sources:
https://link.medium.com/2EnVJh68x2
https://upserve.com/restaurant-insider/online-ordering-statistics/
