Grocery delivery is a hot category right now, and Zero Grocery has raised nearly $12 million in seed funding to fuel its mission for bold, sustainable disruption in the market.
The startup, based in Fresno County, announced the round led by Sway Ventures on Thursday. The round brings its total funding to just over $16 million.
Zero Grocery aims to cut down on plastic while building out what founder Zuleyka Strasner describes an ethical and sustainable supply chain that extends from labor to suppliers to consumers.
Strasner, 36, didn't set out to be an environmentalist and sustainability advocate, though.
She grew up in the U.K. and studied politics at Oxford University, after which she worked on a political campaign for a Labour Party candidate before jumping into the tech industry. In 2016 she moved to the Bay Area and joined Menlo Park venture firm Felicis as its chief of staff.
She founded the company in 2019 after honeymooning in the Corn Islands off the coast of Nicaragua, where she noticed lots of plastic trash in what should have been a natural island paradise.
That experience sparked an obsession.
She practiced zero waste living for a year in an attempt to eliminate plastic from her own daily life and then started researching supply chains. Eventually she realized that starting a zero-waste company would have an even greater impact.
Now the company has about 250 employees operating across two major markets: San Francisco and Los Angeles. That includes delivery drivers who are hired in-house and not as independent contractors like most delivery services.
"Our goal is to be the one single behemoth of all sustainable shopping in this country," Strasner said. "Not just reducing plastic but in terms of quality of products, reduction of carbon emissions, supporting good agriculture and strong, good labor practices."
Within five years, Strasner wants Zero Grocery to expand nationally, followed by international expansion within 10 years, she told me. The company is already seeing 160% growth year-over-year, she said, and is aiming to reach millions in monthly revenue this year. And they're doing it without memberships or delivery fees.
"We're on a path to profitability and we have a clear line to get to profitability. We're already positive on every order, which is something that a lot of my competition cannot even say," Strasner said. "I'm still playing in the upper echelons of grocery. It's the very best produce and the very best products. I don't have to play this game of razor-thin margins and cheap products to compete with the likes of Big Box America."
Grocery delivery is notoriously difficult with challenges that range from last-mile delivery to refrigeration. Even the best in the category have had to pull back.
Oakland-based Good Eggs expanded too quickly several years ago and in 2015 pulled out of Los Angeles, New Orleans and Brooklyn to refocus just on serving the Bay Area. It reentered Los Angeles in January, according to Eater LA.
Amazon offers Prime members one- to two-hour grocery delivery from its nationwide network of warehouses and Whole Foods stores (which it bought in 2017 for over $13 billion). But even the pioneer of "free delivery" backpedaled on that premise last year when it implemented a $9.95 fee for all Whole Foods deliveries.
Despite the challenges, Zero Grocery wants to offer two-hour delivery and says it's currently averaging 75-minute deliveries.
"We're really focused over the next 12 months on growing LA and S.F. We're committed to LA and SF," Strasner said. "I think it's a mistake for us to try to grow too quickly, in too many states and too many cities. My focus for 2022, when everybody else is trying to open in every city under the sun, is to focus on servicing my customers and my future customers that are in these two cities in the very best way that I possibly can."
A crucial part of this operation will be building out a sustainable supply chain. The company is also developing its technology to manage that in order bring on more vendors that meet Zero Grocery's standards for high quality products that come in low waste packaging.
Other grocery delivery startups based in the Bay Area include Good Eggs, Weee!, Instacart and Imperfect Foods, with DoorDash also trying to expand into the category.
