Dubai-based cloud kitchen start-up iKcon raised $20 million in a Series A round to fuel its expansion into Saudi Arabia.
The round was led by regional investment groups including Mohamed Yousuf Naghi Group, AlTouq Group, Derayah Ventures, B&Y Venture Partners, AbdulMohsin Al Houkair Holding Group, and Nazer Group, the company said in a statement on Sunday.
The latest round brings iKcon's total funding to $32m and will help it expand regionally and improve its technology.
Cloud kitchens, or ghost kitchens, are commercial establishments that produce food specifically for delivery and do not provide dine-in services or takeaway. The global ghost kitchen market is expected to be valued at $71.4 billion by 2027, up from $43bn in 2019, according to Statista. Cloud kitchen revenues within the UAE and Saudi Arabia grew 160 per cent year-on-year to reach more than $65m in 2019, a report by RedSeer Consulting showed.
Increasing popularity of the food delivery segment amid the pandemic has further fuelled the popularity of such entities.
"We are laser-focused on further developing our technology to accelerate the evolution of data analytics, process automation, and AI as a key differentiator in how we operate in our fast-growing sector," said Khalid Baareh, chief executive of iKcon.
Founded in 2019 by Mr Baareh and Kareem Abughazaleh, iKcon currently operates 15 cloud kitchens across the UAE. It aims to grow its network to 50 cloud kitchens but did not provide a timeline to achieve this target. The company has more than 650 employees.
Cloud-kitchen companies in the region have been popular among venture capitalists and other investors as the Middle East's food delivery market becomes lucrative.
Dubai-based Kitopi raised $60m in a Series B round last year and said the funds would allow it to add 100 more locations around the world by the end of this year.
Another cloud-kitchen Sweetheart Kitchen raised $17m last year and is also reportedly backed by DeliveryHero, the parent company of Talabat.