Photographer: Zack DeZon/Bloomberg
Venture Capital

Food Delivery Startup SpoonRocket to Close Shop

The company says it failed to raise venture capital and was squeezed out by competitors.

SpoonRocket, one of the first food delivery startups to sell meals cooked in its own kitchens, will shut down its operation on Tuesday. The Berkeley, Calif., company said it failed to raise funding and got squeezed out by competitors.

SpoonRocket has raised $13.5 million from venture capitalists including Foundation Capital, General Catalyst Partners, and Funders Club, according to research firm CB Insights. Investors have put more than $170 million combined into rivals Munchery and Sprig. SpoonRocket encouraged customers to download Sprig’s app as an alternative.

Tech startups specializing in food preparation or delivery raised $5.7 billion in 2015, CB Insights said. The surge followed a flurry of acquisitions in recent years, including Square Inc.’s purchase of Caviar and Fastbite, as well as Yelp’s acquisition of Eat24 for $134 million. But in June, CB Insights declared the market “overcrowded.”

“We continued to face intense competition from competitors like Sprig and an ever-tightening funding environment,” SpoonRocket wrote in a blog post. “We explored all strategic options till the very last minute, but unfortunately, they all fell through.”

After SpoonRocket was founded, in 2013, within the business incubator Y Combinator, the company started offering organic, premade meals delivered to customers in the San Francisco Bay Area. Last year the service expanded to Seattle, an experiment that lasted only four months, tech blog GeekWire reported.