"We had retention that was 3-4 times better than other meal delivery services. We had low awareness, lots of room for product innovation, and a seemingly clear path to an IPO. Then the war broke out in Ukraine, and capital markets started to get spooked. All of the sudden, fast-growing, unprofitable consumer businesses were out of vogue. We managed to raise $32mm, not a small sum, but it felt like a failure."
"It meant a complete shift in mindset of every team member. For years we had been focused on scaling as quickly as possible. For example, for our operations team, that meant thinking about how we could safely fulfill an increasing number of meals every week and, in their spare time, figuring out how to improve our margins. We had to flip that mindset on its head."
Tovala pursued a $100mm venture raise in early 2022 after surpassing $110mm in revenue and more than 100% YoY growth, with retention 3–4× better than peers and room for product innovation. The war in Ukraine spooked capital markets and investor appetite for unprofitable consumer growth evaporated, resulting in a $32mm raise. Facing a $26mm burn in 2021, the company shifted to stretch runway by prioritizing profitability. Teams adopted disciplined hiring, performance management, P&L scrutiny, margin initiatives, operational efficiency, and celebrated small cost and product wins to sustain the business.
Read at Fast Company
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