Dubai based cloud kitchen company, Kitopi, raised $415 million in a new funding round led by SoftBank, that will help it expand operations in the Middle East and support its entry into Southeast Asia as the coronavirus pandemic increases demand for online food delivery services.
SoftBank group’s Vision Fund 2 led the funding round which also attracted Chimera, Abu Dhabi’s DisruptAD, US based B Riley, Turkey’s Dogus Group, Next Play Capital and Nordstar, Kitopi said in a statement on Thursday. The deal is the first investment by Vision Fund 2 in a UAE registered company.
The latest investment from SoftBank and others is “not only a great commitment to our company but to the industry and the region,” Mohamad Ballout, chief executive and co-founder of Kitopi said. “Our focus now is to expand our presence within the Middle East and to Southeast Asia while continuing to innovate and pioneer in the cloud kitchen space.”
Cloud kitchens or ghost kitchens, are commercial establishments built to prepare food specifically for delivery and they have benefited from the shift to online services during the coronavirus crisis. They have no physical presence as a restaurant, and offer delivery-only services from a centralised location through a mobile app.
The size of the global cloud kitchen market stood at about $43.1 billion in 2019 and is expected to grow at an annual rate of 12 per cent to reach $71.4bn by 2027, according to Allied Market Research.
Kitopi operates more than 60 cloud kitchens across the UAE, Saudi Arabia, Kuwait and Bahrain.
Founded in 2018, by Mr Ballout, Saman Darkan, Bader Ataya and Andres Arenas, the company has more than 2,500 employees currently. It is partnering with a number of restaurants and food and beverage brands across the region to serve customers.
“Constraints placed on the hospitality sector by the global pandemic have rapidly catalysed the value proposition of cloud kitchens for customers and restaurant brands,” Faisal Rehman, managing partner for SoftBank Investment Advisers, said. "We believe Kitopi’s proprietary technology is changing the unit economics of food delivery in providing more choice to more customers, in more places.”
The company’s smart kitchen operating system is a suite of applications that optimises the performance of its cloud kitchen to serve customers in a better way, according to the company.