Munchery, an on-demand food delivery startup that has already raised more than $120 million, is reportedly looking to raise an additional $15 million in funding that would force a recapitalization of the company, Bloomberg reports. Munchery reportedly has raised more than $5 million in this new financing.
As part of the recapitalization, Munchery issued shares to new investors in the form of a convertible note, which can later be exchanged for equity in the result of another equity raise or liquidity event. One person told Bloomberg that the valuation on the note is capped at $80 million.
Munchery’s last round of funding was an $85 million Series C, which valued the company at around $300 million. So Munchery wouldn’t be valued at more than about a quarter of what it once was.
This new deal essentially wipes out the stakes of pre-existing investors and early Munchery employees. Recapitalizations generally happen when the company can’t find outside investors to drive the valuation further up, so it resets the cap table and starts from scratch.
Munchery has had a rough last 12 months, between scathing reports of the company wasting an average of 16% of the food it makes, laying off 30 employees, and burning through most of the money it’s raised.
In November, Munchery hired James Beriker, the former CEO of Simply Hired, to take over Munchery co-founder Tri Tran’s role as CEO. As of January, both Tran and Munchery co-founder Conrad Chu no longer worked at the company.
I’ve reached out to Munchery and will update this story if I hear back.
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