We are very excited to announce the closing of xtraCHEF’s $7.5 million Series A financing led by MVP Capital with follow-on support by Laconia and ValueStream Ventures. We were introduced to xtraCHEF about 2 years ago through Michael Moretti, Managing Director at Silicon Valley Bank, and were immediately impressed with Andy Schwartz, the company's CEO. Andy possesses a confident sense of direction, all the attributes of an excellent listener, and unparalleled grit. He, along with his co-founder and CTO, Bhavik Patel, has created a strong team foundation for building a great company. We led their $3 million seed round and are excited to support the company in this next stage of growth.
As a refresher, xtraCHEF, based in Philadelphia, is an automated Accounts Payable and Cost Intelligence platform built specifically for the hospitality industry. They help restaurant operators save time and money by eliminating manual back-of-house tasks. xtraCHEF digitizes and archives invoices and vendor statements, extracts and analyzes line-item details, and provides this data to view, analyze, and share. With this full suite of cost management tools, xtraCHEF empowers hospitality operators to drive profitability, an increasingly critical mission in the highly competitive, low margin food service industry.
From our first meeting, Andy and Bhavik were open and candid about their company, including the fact that they were new to raising venture capital. We never felt that they were selling us in order to close the funding round. They impressively understood that good-fit investors are those who are willing to roll up their sleeves and support business planning. Yes, they were looking for capital, but they also wanted value-added investors with whom they could form a true partnership of success. They have executed this approach with all of their investors, including those in the new Series A round. That’s our kind of entrepreneur!
In addition to working with Andy on positioning xtraCHEF within the VC community, we also helped him communicate the expectations of taking on institutional capital to his initial angel investors. Angels often look upon VCs with skeptical eyes and need to be assured that they are still a welcome support group to the company and also flexible enough as to not impede a new round of financing. Part of this communication is to explain in detail the capital strategy and how it aligns with an operating plan to paint the vision and create excitement. Taking venture capital should put a company on a different, more accelerated growth trajectory than most business people are familiar with. This shift may bring unfamiliar operating risks and even capital structures to those investors. Managing past investors with respect and transparency is an important part of fundraising.
In tandem with solving a high pain point problem for their customers, the xtraCHEF team has executed with impressive capital efficiency. Bhavik has built an excellent India-based offshore development team, providing one of the best examples of in-house off-shoring we have encountered. Andy has also segmented his go-to-market strategy with precision, allowing him to rapidly build revenue without a large sales infrastructure. Of course, the new capital will leverage this foundation allowing for even greater market scale. Laconia has a strong bias for sales-oriented leaders, which Andy is to a very high degree.
Congratulations to Andy, Bhavik, and the entire xtraCHEF team on this newest achievement!