Food delivery startup Froogle has raised $500,000 from Minneapolis-based venture capital firm Traction Capital.
Zimmerman, Minn.-based Froogle works much like other delivery companies, such as DoorDash Inc. (NYSE: DASH) or Uber Eats. Unlike those services, which charge commission fees to restaurants, Froogle is free for restaurants to use.
Froogle makes its revenue through nominal fees when customers place orders, as well as through deals with credit card processors that provides a percentage of the transaction fee, according to Brian Cox, integrator and president of Traction Capital.
Froogle has a further arrangement with a food delivery company that delivers the food. This allows the delivery company to earn a delivery fee, and Froogle to earn a transaction fee.
Cox said Froogle's model incentivizes restaurants more than its established competitors.
"Restaurants have had a really tough time in the last two-and-a-half years," he said. "Takeout and delivery has really sustained them, but to pay 20 or 30% of their income to process a takeout or delivery order really cuts into the bottom line."
In addition to food orders, Froogle also assists restaurants with online marketing and web development.
Froogle currently has clients in 25 states and boasts a retention rate of 90%. It is now looking to hire eight employees in several roles including sales, social media and content management.
"We are growing so fast that we are seeing 15-20% month to month growth,” Michael Juszczak, founder and CEO of Froogle said in a statement.
Traction's other portfolio companies include Rochester-based GoRout and Duluth-based ControlBright.
"Because we're industry agnostic, we're not focused on one specific industry," Cox said of Traction's portfolio. "And really, we're focused on the founder, we're focused on a company that can build a true business. And Froogle just fits nicely and fills sort of a gap for us."
