Charlottesville-based online food-ordering startup Foodio recently announced it has raised $585,000 in local seed funding.
Jaffray Woodriff, the CEO of Quantitative Investment Management and a Charlottesville resident, made the bulk of that investment with a $575,000 infusion of funds. Foodio’s founders approached Woodriff with their pitch after other companies recommended him as an investor.
“We were impressed with the tenacity of the founders,” said William Foshay, president of Woodriff’s family office. “It was a lot about Rory [Stolzenberg] and Connor [Clark] bootstrapping the company a long way toward some early indications of revenue.”
Foodio integrates online ordering into restaurants’ own websites, in contrast to companies such as GrubHub and OrderUp that are structured as self-contained online marketplaces. Foodio’s founders tout their product’s ability to easily split payments on individual orders as a key selling point.
Foodio has expanded from serving 22 Charlottesville-area restaurants as of September 2014 to more than 300 eateries throughout the Mid-Atlantic. The company’s focus on food service, however, makes it a somewhat surprising investment for Woodriff.
“It isn’t like we invest in the online food-ordering space heavily,” Foshay said. “It was a little bit exceptional, but [Woodriff] is always looking for founders who impress him.”
Woodriff now has an observer seat on Foodio’s board but will not be directly involved in the company’s management, according to Foshay.
The realm of online payments has changed significantly since Foodio’s founding, with the release of mobile apps such as Venmo and the incorporation of payment features into Facebook and Snapchat. Foodio’s service remains unique thanks to ongoing technical development.
“I still think the bill-splitting adds value, because you’re splitting it right there during the transaction instead of having to cobble the money together after the fact,” said Foodio founder and CEO Rory Stolzenberg. “In addition to just putting in multiple credit cards while you order on one computer, you’ll soon also be able to invite people to your order [online] and really manage the bill-splitting, making it a whole social ordering experience.”
In addition to helping attract seed funding, Foodio’s growing revenue has allowed its founders to modify their business model. They removed a $295 upfront fee charged for setting up a restaurant’s website and mobile app.
This change, along with hiring a salesperson, instantly created an influx of clients.
“We were at two to three restaurants a month, and almost immediately [the salesman] was getting six of them. Now he’s up to 10 or 15,” said Stolzenberg. “We can see that getting rid of the upfront fee makes a restaurant a lot more likely to get involved.”
In spite of the rapid expansion, the Foodio team has tried to stay active in the Charlottesville entrepreneurship community. Until only two weeks ago, the company operated out of University of Virginia’s i.Lab startup incubator, working alongside numerous other local entrepreneurs.
“We love to see the progression of HackCville,” said Stolzenberg, referring to the Elliewood Avenue entrepreneurship clubhouse where Foodio began. “When it was first starting, it was just a handful of teams. [It’s progressed] to being a huge organization now with a lot of influences on Grounds. It’s really encouraging to see.”
In the short term, Foodio will be using the new funds to improve restaurants’ ability to manage their own menus and orders. Beyond that, Stolzenberg is mainly focused on expanding his clientele.
“One thing that’s a little bit different about our startup is that we have a pretty straightforward business model, and we’re revenue-generating,” Stolzenberg said. “Once restaurants are online, it’s just a matter of getting them orders and keeping it working, and then expanding to new restaurants.”
Foodio’s team also plans to add a director of operations in Charlottesville and salespeople around the country. The company currently offers ordering from 20 local restaurants at EatFoodio.com.