Taiwanese cloud kitchen startup 3 SQUARE, which recently announced raising an oversubscribed Seed round of $1.2 million, has set plans to expand beyond Taiwan and it is in the midst of preparing for the next funding round.
3 SQUARE, a digital foodhall network and virtual restaurant group, has recently raised a round of investment from Taiwanese department store chain Hanshin Department Store Co. Ltd and FoodTech venture capital firm Foodland Ventures. Prominent family offices and angel investors have also participated.
The funding will be used to scale the business in Taiwan and prepare for its entry into Southeast and North Asia, 3 SQUARE said in a statement.
The seed funding round came while many in the F&B industry have felt the negative impact of the coronavirus pandemic. Taiwan has imposed curbs on gathering last month to limit the spike in community transmissions of the virus. On June 23, the Central Epidemic Command Center announced that it has decided to extend its nationwide Level 3 epidemic alert for another two weeks (until July 12).
“With COVID-19 leading to the closure of restaurants and bars, many restaurant owners are looking for an alternative to the traditional brick and mortar restaurant business model in order to cope with the significant shift in consumer demand from dine-in to delivery, a rapidly changing F&B market, and high overhead costs. 3 SQUARE eliminates barriers to growth, reduces risk and enables partners to grow profitably by providing upgraded cloud kitchen spaces,” said 3 SQUARE Founder and Chief Executive Officer Victor J. Chow in a statement.
The fund raised in the seed round will be used to expand its operations in Taiwan and the company plans to expand to three locations by end of this year, with 60 brands in its ecosystem, he told TechNode Global when contacted.
“The fund will be used to set up kitchens, infrastructures, marketing, R&D, and others,” he said in a brief phone interview.
Food delivery service has already gained traction in Taiwan, even before COVID-19 pandemic hit, according to Chow.
“It has already become a part of everyday life,” he said.
Food delivery service is further boosted by the outbreak of COVID-19 pandemic in Taiwan. Last year, the food delivery market in Taiwan saw a 500 percent growth year-on-year, reaching $1 billion, according to Frost & Sullivan.
“There was a level three, semi-lockdown in Taiwan that happened about three to four weeks ago. About one month ago, every day orders were at about 600,000 orders per day. Right now, that number is about 800,000 and it is growing. So that’s close to a 35 to 40 percent increase,” said Chow.
On the company’s plan to expand overseas, Chow, who was an executive at food delivery platforms Honestbee and Foodpanda prior to founding 3 SQUARE, said that the company is looking at locations he is familiar with, including Hong Kong, Singapore, Malaysia, Thailand, Indonesia, the Philippines, and Japan.
He said his team’s and his own experiences in the FoodTech industry and the information, knowledge, and insights in Asia Pacific markets serve as a competitive edge against other players.
The company is also in the midst of preparing for its next round of fundraising to accelerate an expansion of 300 brands in its ecosystem across Southeast and North Asia, with the vision to become the most impactful cloud kitchen network and virtual brand group in the region.
“The fundraising will be soon,” Chow said, declining to disclose the timeline and amount to be raised.
Founded in 2020, 3 SQUARE’s first location is in the center of Taipei City, with twenty restaurant brands available for delivery, takeaway, and dine-in. Popular restaurant partners include new brands from the Michelin-starred MUME Group and 30-year-old night market standout Shi Yuan Taiwanese Fried Chicken.
3 SQUARE also has a virtual restaurant group with six in-house fully branded restaurant concepts available at launch. These menus are developed using big data and trend analysis with culinary design and consumer insights. It also provides tech-enabled, turnkey solutions that are both sustainable and profitable by maximizing utilization and revenue per square meter of kitchen spaces.