Dubai-based cloud kitchen startup Kitopi has raised USD 415 million in a Series C investment led by SoftBank’s Vision Fund 2, the company said in a statement. It is one of the largest-ever financing rounds raised by a venture-backed company in the Middle East and North Africa. It is also the first investment by SoftBank in a Middle Eastern company. Kitopi did not disclose its valuation but confirmed to MENAbytes that it is over USD 1 billion, making it the third Middle Eastern unicorn and the fastest one to attain the status. The deal was also joined by several other leading growth investors, including Chimera, DisruptAD, B. Riley, Dogus Group, Next Play Capital, and Nordstar.
Founded in 2018 by Mohamad Ballout, Saman Darkan, Bader Ataya, and Andy Arenas, Kitopi operates a network of over 60 cloud kitchens in the United Arab Emirates, Saudi Arabia, Kuwait, and Bahrain. It had also expanded to the United States in 2019 but exited the market after the start of the pandemic.
The three-year-old startup partners with F&B brands to help them expand their reach through its cloud kitchens. The startup takes care of all the operations, from the preparation of food to delivery, while working with the restaurants on a revenue-sharing basis. According to its website, it works with more than 200 brands, including Shake Shack, Papa John’s, Jollibee, Nathan’s Famous, IHOP, and many others.
In a statement, the company said its competitive advantage is in its proprietary Smart Kitchen Operating System, a suite of applications that optimizes the performance of its cloud kitchen operations in real-time. It helps Kitopi manage multiple brands in a single kitchen and maximizes operational efficiency. “One application, for instance, uses data science to predict when drivers will arrive and how long a menu item would take to cook, then automatically sequences which items are cooked first, to enhance speed,” noted the statement.
Since its launch three years ago, Kitopi’s kitchens have been able to double order volume while reducing preparation time by 40%. The startup has also expanded into subscription-based meal plans and grocery delivery in the last 12 months. Its overall business grew 300% in 2020.
Mohamad Ballout, co-founder and CEO of Kitopi, said, “These past three and a half years have taught us the importance of pursuing our vision with grit, focus, and building a high-performance culture. We are humbled to work with world-class partners such as SoftBank, Chimera, DisruptAD, and others. What this shows is not only a great commitment to our company but also to the industry and the region. Our focus now is to expand our presence in the Middle East and Southeast Asia while continuing to innovate and pioneer in the cloud kitchen space. We are excited to take what we do to other parts of the world.”
Faisal Rehman, managing partner for SoftBank Investment Advisers, said, “Constraints placed on the hospitality sector by the global pandemic have rapidly catalyzed the value proposition of cloud kitchens for customers and restaurant brands. We believe Kitopi’s proprietary technology is changing the unit economics of food delivery to provide more choices for more customers in more places. Moreover, we are delighted to welcome Kitopi as SoftBank’s first UAE-headquartered investment and are excited by the company’s growth prospects in the region and beyond.”
“Mohamad has assembled one of the highest quality leadership teams from the get-go and continues to build a depth of talent across the organization. Coupling this with being one of the first companies in the world to innovate in the cloud kitchen space globally makes for an incredibly exciting venture outcome to be borne out of Dubai—we are privileged to have the opportunity to work with Kitopi,” said Dany Farha of Beco Capital.
Tushar Singhvi, deputy CEO and head of investments at Crescent Enterprises, said, “As a long-standing partner, CE-Ventures continues to support the company’s ambitious global expansion plans. Becoming the region’s fastest unicorn is just the beginning.”
Kitopi had previously raised USD 60 million in a Series B round in early 2020.
This article was originally published on MENAbytes.