The Rounds, a Philadelphia startup focused on custom deliveries of "the boring groceries," has raised a $38 million Series A round to bolster its technology and recruit talent.
The funding was led by Silicon Valley venture capital powerhouse Andreesen Horowitz and Redpoint Ventures. The fresh funding brings the total amount raised by The Rounds to $42 million, following a $4 million seed round led by Construct Capital and Josh Kopelman's First Round Capital.
A startup born out of the Wharton School at the University of Pennsylvania, The Rounds delivers and refills "bottom of the cart" products like cleaning supplies, pet supplies, everyday household items and standby pantry products.
"When you go to the grocery store, it's the stuff on the bottom of your shopping cart that never changes," said CEO Alex Torrey, who co-founded The Rounds with Byungwoo Ko, who is now COO. "If you think about it, the majority of your shopping cart when you're in the grocery store, it's the same stuff. We handle the stuff in the shopping cart that doesn't change."
The company has seen revenue multiply by 10-fold over the past year and has grown to more than 10,000 members.
The startup also is working to incorporate elements of sustainability and predictability to its business model. It delivers the goods in reusable containers that an employee picks up to refill each week and is in the process of innovating its "psychic home manager technology." The technology allows members to stay stocked on necessities by scheduling deliveries on a cadence, like having trash bags automatically delivered every two weeks.
"What this funding does is it allows us to continue to make big investments in the technology that will power our psychic home manager, that prediction engine, and continue to hire the absolute best talent," Torrey said.
The Rounds has an early version of the psychic home manager, but wants to hire to continue to "iterate" that technology to be more predictive and automated. Torrey said the company is looking to hire people in data science and engineering to continue to build out the technology associated with the product.
Torrey declined to disclose how many employees are currently at the company. LinkedIn shows 83 employees who list The Rounds as their place of employment.
Torrey added that another key aspect is perfecting two-way, last mile delivery. That means having The Rounds employees pick up and drop-off the reusable containers, or what has come to be known as "the milkman model."
"Nobody has built reverse logistics at scale, nobody has built a two-way last mile network at scale," Torrey said. "So there's a lot of new technology that needs to be built to support reverse logistics. "
The Rounds currently operates in four markets: Philadelphia, Washington, D.C., Miami and Atlanta. Torrey said the plan is "going deeper in our existing markets" and sees opportunity for continued growth in those before looking to roll out in others. However, he highlighted the importance of Philadelphia to the company.
"Philly is our OG, our most special market, our No. 1 market," Torrey said. The Rounds has struck partnerships with local outposts like Bean2Bean Coffee, Kismet Bagels, Philly Nuts, Triangle Roasters and Vesper Bros. Foods.
Other Philadelphia-borne companies are making noise in the food delivery space. Valued at more than $2 billion, Misfits Market recently acquired competitor Imperfect Foods and now has its sights set on an IPO. Gopuff, once said to be eyeing an initial public offering has pumped the brakes on growth, but still has a value of $15 billion.
Torrey, however, says The Rounds aims to differentiate itself.
"This is not about fulfilling your last minute wants, 'I want a pint of ice cream, I want Flamin' Hot Cheetos at 3 a.m.,'" Torrey said. "This is about the most efficient way to avoid your last minute needs."
