Online grocery startup Honestbee raises $15M from Silicon Valley to deliver the goods

Honestbee founders (L-R): head of products Isaac Tay, CEO Joel Sng, and Singapore country manager Jonathan Low.

Online grocery delivery service Honestbee has raised US$15 million in a series A round, it announced today. Silicon Valley investment firm Formation 8 led the round. The company has a track record of investing in technology companies like Oculus VR.

The round was joined by Silicon Valley venture fund Pejman Mar Ventures, an investor in Dropbox and Lending Club, as well as Facebook, Amazon, and Google luminaries Gideon Yu, Owen Van Natta, and Steve Chen. It’s an investment round with an unmistakable Bay Area flavor for the Singapore-based company.

Honestbee provides online grocery delivery within one hour of ordering, the company claims. It uses freelance shoppers who receive the order on their phone, purchase the groceries, and deliver them to your door. The company has partnerships in Singapore with supermarket chains NTUC Fairprice and Cold Storage, pet products retailer Pet Lovers Center, and specialty retailers like Gastronomia da Paolo, Crystal Wines, and Four Seasons Organic.

The company is operating in Singapore and has just announced its Hong Kong launch. Plans include expansion to another six major cities by June 2016, it says. In the last eight months, it has staffed up to 100 people and continues to look for more hires.

“Most people in Asia are time-starved due to the demands of their job and a large proportion of the population do not possess their own vehicles,” co-founder Isaac Tay says in a statement. “With our on-demand delivery service, time-crunched customers can enjoy the widest choices from their favourite stores, even at the last minute.”

Formation 8 founder, Brian Koo, says: “Formation 8 believes that the hyper-local on-demand market plays a significant role in the way commerce will evolve. Given the increasing population density across all the key cities in Asia due to job and wealth creation, this is right time and opportunity.” Joel Sng, a founder of Honestbee, is a general partner at Formation 8.

See: Food fight: New challengers spice up Singapore’s online grocery war

For a relatively small market like Singapore, the competition in online grocery delivery is heating up. Redmart is perhaps the major player in this area, while other competing services include GoFresh and PurelyFresh. Further out in the region, HappyFresh is currently operating in Indonesia, Malaysia, and Thailand. Freshness abounds in the market, it seems.

Redmart operates differently than Honestbee. It doesn’t use the Uber model for shoppers, but relies on its own warehousing and fleet infrastructure. HappyFresh, like Honestbee, relies on freelance shoppers, and is already operating in territories that Honestbee could be looking to enter (as any Southeast Asian startup in its right mind would, let’s face it). Plus, it has financial backing of its own in the seven-figure range by undisclosed investors.

Honestbee cites a Goldman Sachs report which said the online grocery shopping market in Asia is estimated at US$18 billion. Meanwhile, developing markets in Asia Pacific are most willing to use online retail solutions like grocery delivery, according to Nielsen’s Global E-Commerce and The New Retail Report.

The question, then, becomes whether competition can help the online grocery delivery space grow in Southeast Asia, or if it will start a race to the bottom. The latter case might be good news for consumers’ wallets, but it’s almost certainly bad news for any company that wants to remain sustainable.