Toronto-based startup Notch has secured $12.5 million CAD ($10 million USD) in funding, as the startup looks to expand its recently revamped restaurant supply chain offering to new markets.
“We’re in a position to fundamentally change the way any restaurant in North America goes about buying the supplies that they need.”
The round, which Notch is calling its Series A-2, was a convertible note led by Accomplice and BDC Capital, with participation from MATH Venture Partners, Golden Ventures, The Yield Lab, Garage Capital and Plexo Capital. BDC’s portion of the round includes a $3 million investment the crown corporation made in July 2020 through its Bridge Financing Program.
Several angel investors participated in the round, including prominent Canadian startup coach, advisor, and investor Mark MacLeod. To date, Notch has raised approximately $30 million CAD ($24 million USD), partially from two prior Series A rounds.
The raise comes on the heels of some major changes for the startup, which rebranded from ChefHero following a pandemic-fuelled pivot. Jordan Huck, CEO of Notch, told BetaKit the latest financing represents a “validation” of the changes Notch has made and will “fuel the fire” as the startup looks to continue its expansion in the United States.
Notch’s software aims to help restaurant and distributor clients buy and sell products, increase visibility, decrease food waste, save time, and reduce costs. The startup’s offering comprises a number of tools that focus on digitizing the wholesale foodservice supply chain.
Prior to the pandemic, Notch (then ChefHero) focused on the buyer side of the food supply chain, which meant helping restaurants discover new distributors. Once the pandemic hit Canada, like many of its restaurant customers, Notch took a hit. Following sharp revenue decreases, the startup let go of 10 employees in the spring.
But as the pandemic decimated the restaurant sector, the team behind Notch identified an opportunity to refocus the startup’s business model and reduce more inefficiencies in the food supply chain.
Notch’s current platform is designed to help both restaurants and wholesale distributors reduce costs and streamline their operations. During the pandemic, the startup introduced a monthly subscription fee for distributors as well as new tools to allow distributors to accept electronic fund transfers and cheque payments.
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In addition to pivoting its product and business model during the pandemic, Notch rolled out a new software product called Notch Connect, which allows distributors to digitize the tasks associated with making food orders.
The startup’s pivot appears to have resulted in big gains. Notch has nearly doubled its staff, growing from 40 employees to approximately 76. On the business side, the company recently claimed revenue and sales have both increased by approximately 450 percent since April 2020. Notch’s software is currently used by over 200 distributors and nearly 1,500 restaurants, including Ghost Kitchen Brands, Paramount Fine Foods, Gusto 54 Group, and Banh Mi Boys.
Earlier this year, Notch launched in cities across Texas as well as in Chicago, and with the fresh funding, the startup is looking to continue its US expansion. Over the next 18 months, the startup plans to roll its platform out in cities across California, as well as the East Coast, including New York, Boston, and Philadelphia.
The startup is also looking to put the new funding toward new products. The startup is developing an automated payment and collection solution for restaurants and distributors, which is set to launch in the next month or so.
Looking ahead, Huck said he wants Notch to be the de facto software provider for restaurants and distributors looking to digitize their supply chains.
“We believe we’re in a position to fundamentally change the way any restaurant in North America goes about buying the supplies that they need,” Huck told BetaKit. “We have an opportunity to make that a better process.”
Image source Unsplash. Photo by Michael Browning.