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- 🤯 How UglyFood died and revived after 4 months
🤯 How UglyFood died and revived after 4 months
And how you can win by staying in the game for as long as possible
Admond Lee
April 07, 2024
Read Time: 5 minutes
Hey Founders,
Welcome to The Runway Ventures, a weekly newsletter where I deep dive into startup mistakes and lessons learned to help you become a better founder.
Today’s failed startup is quite special because it didn’t actually “fail”. It shut down after 7 years of operation but made a strong comeback 4 months after closure. 🤯
In fact, it was an inspiration to every founder.
Let’s get to it! 🚀
Today at a Glance:
☠️ 1 Failed Startup → UglyFood
⚠️ 2 Mistakes → Chasing growth instead of profitability
🧠 3 Lessons Learned → Create win-win & strategic partnerships
🔗 The Runway Insights → Lessons from a $60M Series A Fundraise
🤝🏻 The Founders Corner → Should I find a job or build another startup after my previous startup closed down?
☠️ 1 Failed Startup: UglyFood
🚀 The Rise of UglyFood
UglyFood was founded by Augustine and Peishan in 2016 to eliminate food waste and revamp the food ecosystem by selling excess “ugly” fruits and vegetables as well as its own branded products and sustainably sourced goods.
According to Crunchbase, the company previously raised USD 120,000 in a pre-seed round.
The Problem — “Ugly” foods are often being thrown away by supermarket chains, local farmers, and wet market stall owners, resulting in a massive waste of food.
The Solution — UglyFood eliminates food waste by collecting and repackaging and selling excess “ugly” foods.
In 2021, UglyFood told CNA it had saved 200 tonnes of food since it was founded in 2016. UglyFood was also in talks with three investors to raise seed funding worth US$1 million.
👀 Fun Fact:
UglyFood was born through a university project when Augustine and Peishan were studying at SUTD. After doing primary research and talking to stakeholders, they realised a lot of ugly food became ugly through logistical processes such as distribution and transportation.
Most importantly, ugly foods are perfectly edible and as nutritious as other more aesthetically pleasing foods.
Guess what? They turned this massive food waste into a business opportunity, and UglyFood was born.
📉 The Fall of UglyFood
However, despite the huge market opportunity in the space, UglyFood was struggling to survive.
On 4 January 2023, UglyFood announced on Facebook that they were shutting down after 7 years of operation, saying it failed to raise enough funds to continue running and growing the business.
💟 Many customers expressed their sadness and disappointment to the news and looked forward to a revival again soon. Some even asked if the company would accept crowdfunding to stay afloat.
💪🏻 UglyFood 2.0 is back
After the initial closure, Augustine found a strategic partner (remain “hidden” for now) and investors (undisclosed amount) with the help of media interest and public support. With the new resources and expertise from strategic partners, Augustine revamped the business to move forward.
Finally, 4 months after closure, UglyFood announced that they are back in business with UglyFood 2.0 on 10 May 2023! 🥳
“We’re back, and we’re here to stay for a while.”
🌟 What’s Changed?
UglyFood has a complete overhaul of its logistics, delivery system, and procurement process, including a new cold-storage warehouse and cold trucks for fresh deliveries.
This cold chain procedure ensures a higher level of quality control and freshness, resulting in higher fulfilment rates.
With the new partnership between UglyFood and its strategic partner, they could share personnel and logistics assets.
This means UglyFood has reduced costs on logistics and manpower.
On top of local food markets and supermarkets, UglyFood now also sources vegetables and fruits directly from farms.
From the initial closure to a revival within 4 months, UglyFood’s inspiring story shows us that as long as you continue staying in the game for as long as possible, you still have a chance to win.
Want to learn more about UglyFood’s stories?
⚠️ 2 Mistakes
Mistake 1: Chasing growth instead of profitability
“We were chasing growth instead of profitability. Anything that requires growth, requires cash.”
This is one of the main challenges and mistakes shared by Augustine during his interview with Tech In Asia.
When UglyFood was started, Augustine adopted an asset-light logistics model where the company:
Employed part-time delivery staff who used their own vehicles
Stored food produce in ice boxes during transit and in “a lot of fridges” inside warehouses.
While this model made sense for UglyFood as they could expand quickly, and hire additional drivers when demand was high upfront investment on trucks and vehicles, UglyFood eventually grew too fast and spread itself too thin.
Mistake 2: Tough space where education is needed
🙅🏻♂️ Despite the huge market opportunity in reducing food waste, many consumers have yet to embrace imperfect food for cosmetic reasons.
Unfortunately, it’s a societal consumers’ mindset where we have been brought up with the perception that good-looking food is ideal for us even though the internal nutrition remains the same.
In short, the perceived value is lower for “ugly” food, hence the pushback to buy “ugly” food.
Because of that, UglyFood has been facing an uphill battle to change consumers’ mindsets and behaviour to truly unlock the market potential.
🧠 3 Lessons Learned
Lesson 1: Focus on profitability
In today’s market climate, growing at all costs is no longer an option to build a sustainable business. In fact, many VCs or investors nowadays are looking to invest in profitable businesses (or at least have a clear path to profitability).
Raising money is cool, but having profitable confidence is even cooler. When you focus on profitability, and you know that you won’t die in the next 2-3 years, your entire perspective changes.
Growth is cool. But don’t forget to have a clear path to profitability before you run out of money.
Lesson 2: Consumers’ mindset is hard to change
Every business exists to solve a core problem. However, if your customers don’t see the problem you’re solving for them, then it’s going to be very challenging for your business.
In the context of UglyFood, they have been facing the same challenge to educate consumers on the importance of reducing food waste (even though this problem is real).
While consumers could buy “ugly” food at a cheaper price, the perceived value is often lower due to cosmetic reasons. Sad, but true.
Lesson 3: Create win-win & strategic partnerships
Wrong partnerships could potentially kill a company. On the other hand, the right strategic partnerships could be a game changer for a company — and this is what happened to UglyFood.
After its initial closure, Augustine found a strategic partner to work with UglyFood. The partnership allowed UglyFood to revamp its logistics, delivery system, and procurement process and launched UglyFood 2.0.
✨ In short, always find the right partners in business, and watch the magic happen.
🔗 The Runway Insights
🤝🏻 The Founders Corner
This is the place where you can ask me any questions about building a startup. Every week, I’ll pick one question to answer.
Just reply to this email with your burning question. Let’s win together 🤝🏻
Founder’s Question:
Hey Admond, I just closed down my previous startup, and I’m wondering if I should find a job or build another startup. Would love to hear your thoughts on this. Thanks!
My Thought:
Sorry to hear that! After I shut down my first startup, I was in your situation wondering what I should do next. Having gone through the journey myself, here’s what I’d suggest:
💼 Find a job if:
You don’t have enough savings (< 6 months) in the bank to support your living expenses
You have a family and children to support
You don’t have any problems you want to solve
You want to take a break from building startups
🚀 Build another startup if:
You have enough savings (> 6 months) in the bank to support your living expenses
You have a problem that you’re passionate about and that you have the skills, experience, or resources to solve the problem
You don’t mind building something from scratch again after your previous burn
This is just my $0.02 as others may have different opinions. Wishing you all the best!
🤝🏻 Join our founders community on Discord:
Building a startup is one of the toughest things you can do. Why struggle alone when you have our community to help and support you.
This is the founders community I wished I had when I first started.
That's all for today
Thanks for reading. I hope you enjoyed today's issue. More than that, I hope it has helped you in some ways and brought you some peace of mind.
You can always write to me by simply replying to this newsletter and we can chat.
See you again next week.
- Admond
Disclaimer: The Runway Ventures content is for informational purposes only. Unless otherwise stated, any opinions expressed above belong solely to the author.
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