Consumer foods startup Yu Foodlabs has raised INR 20 Cr ($2.47 Mn) in its Series A funding round which was a mix of equity and debt. The round was led by ace investor Ashish Kacholia. Existing investors Asian Paints Promoter Group (Manish Choksi and Varun Vakil) also participated in the round. 

Besides, the Department for Promotion of Industry and Internal Trade’s (DPIIT’s) Startup India Seed Fund also participated in the round, Yu Foodlabs said in a statement.

The startup said it would use the fresh funding to double its capacity and ramp up its existing offline/ online distribution in India, while continuing to expand its global footprint across markets like Africa, Middle East and the US.

Founded by Bharat Bhalla and Varun Kapur, Yu Foodlabs has developed a range of 15 products across noodles, pastas, oats, halwa categories that can be prepared in 4-5 minutes by simply adding hot water. The products are sold under the brand name Yu.

The startup claimed that it was seeing significant customer traction with over 200% quarter-on-quarter growth and was on track to sell 1 Mn bowls by the October-December quarter in 2023.

It currently has a team of over 100 employees. Yu Foodlabs is looking to launch 10 more products over the next 12 months to expand its portfolio.  

“Their (investors) pedigree and experience will allow Yu to increase its production capacity to over 8 Mn meal bowls per annum while expanding our offline / online distribution in India,” Bhalla and Kapur said on the funding round. 

“The next 12 months will also see us aggressively expanding our presence in global markets like the US, Africa and Middle East. Additionally, it provides us the capacity and resources to penetrate alternate channels like airlines, railways, hospitals, universities and defense services,” they added.

Yu Foodlabs claimed to have a presence in over 3,000 offline stores. Besides, its products are also available on ecommerce and quick commerce apps, and can also be purchased through its own website. The startup also claimed to be exporting products to the US and South Africa within 12 months of starting operations.

Last year, it raised $1 Mn in its pre-Series A round from Choksi and Vakil. 

According to a report, India’s packaged food market size is estimated to reach $3.4 Bn by 2027, growing at a CAGR of 4.6% during 2022-2027. Eventful lifestyles, rapid urbanisation, changing tastes and preferences, expanding e-commerce services in rural areas, and growing presence of modern retail outlets will be the drivers of this growth.

The last few years have also seen emergence of D2C brands and startups like MasterChow and iD Fresh Food in the ready-to-make food category.