Truffle, which makes cloud-based software for restaurants, has raised a $2.3-million seed round to grow its team and expand across Canada.
The round was led by Accelerate Fund III, with participation from Sprout Fund and Birchcliff Partners.
"We want to take this as far as we can," founder Omer Choudhary told Taproot. "I really wanted to prove the product in the market, get a customer base, show that I could sell it, and once we did that, I said now it's time to go get funding."
The company, which launched just weeks before the pandemic shut things down in early 2020, helps restaurants digitize their operations with tools for managing pickup orders, interfacing with delivery systems, and supporting front-of-house operations. In the past two years, Truffle has onboarded more than 500 customers across the country, including Edmonton's Northern Chicken, Prime Time Donair, and Mikado.
"Our goal is to focus on local first and that's how we grew organically — the local businesses helped us achieve where we're at," Choudhary said.
Truffle's niche is quick-service, independent businesses that are looking to grow to two or more locations but aren't gigantic chains. Such restaurants have continued to experience rapid growth even during the pandemic, and they're lacking solutions to manage expansion on that scale, Choudhary said.
"The other stuff that's out there is super-expensive, has been designed for businesses that are 500+ locations, and it's just overkill for what the restaurant needs," he said.
That said, Truffle can support larger businesses, and the company is working to make inroads into that segment of the market as well. Arden Tse, investment manager for Accelerate Fund III, said Truffle has the team and product to support that ambition.
"That's one of the things that attracted us to (the deal), obviously he's able to sell," Tse said. "There's a need being fulfilled."
Truffle plans to use the funds to roughly double its team to about 25 people by the end of the year, with most of the new hires located in Edmonton.
"I really think that from a tech perspective, there's a lot of talent here. From an affordability perspective, a lot of people are now coming into our region," Choudhary said. "I think our next phase of growth is going to happen locally."
Truffle founder Omer Choudhary said the company will use $2.3 million in seed funding to grow its customer base and double the size of its team by the end of 2022. (Supplied)
Choudhary, who majored in computing science, leaned on his experience serving the restaurant industry to identify the opportunity that led to Truffle. One of his first jobs out of school was to install point-of-sale systems in restaurants.
"Something just kept bugging me," he said. "I got exposed to pretty much every major software application there was and saw the gaps."
Choudhary started working on addressing those issues eight years ago with a point-of-sale system called IQ Interactive. That business grew to about 450 customers, and Choudhary said they will be transitioned to Truffle over time.
"It was just validating the fact that something different needed to be done with restaurants, we couldn't just sell point-of-sale systems," Choudhary said. "We needed to be able to offer technology that gave a restaurant way more than a cash register."
Truffle offers its system using a software-as-a-service model, with optional hardware. The system is modular and offers a suite of tools to help with everything from kitchen management to the pickup process.
Choudhary said about 60% of customers prefer to order directly from the restaurant, and will often choose pickup to avoid the delivery fees. When restaurants use a third-party service like SkipTheDishes or Uber, they lose out on valuable customer information. Using Truffle allows the business to at least capture the information associated with pickup orders, which enables re-marketing opportunities.
Another way that Truffle helps restaurants become more efficient is through its automated pickup system, which allows delivery drivers to pick up orders at the restaurant without needing to interact with staff.
"They just walk up, scan the barcode of their order, a locker unlocks, they grab their food, and they leave," Choudhary said.
That sort of thing makes Truffle appealing to restaurateurs, something Tse has first-hand experience with as a partner in the now-closed Prairie Noodle Shop.
"I asked: 'Where were you when I was running a restaurant?' Because this solves a lot of problems for me."
That's what made him realize Truffle wasn't just another point-of-sale system, Tse said. "He's doing something different. He's riding a wave in the industry that a lot of people, a lot of other companies aren't."
Choudhary said his mission is to help restaurateurs do more with less, especially if they're willing to commit to going digital.
"Digitization in the restaurant industry is here to stay, it's getting more and more important," Choudhary said, citing shifting market dynamics like staffing shortages and the increasing number of online orders.
"The restaurants that don't digitize are not going to survive."
He said the market opportunity in North America could be as large as $60 billion, and that many of the customers in Truffle's niche are underserved by existing offerings. Choudhary plans to seek a Series A round after expanding across Canada, to go after the U.S. market.
"My vision is essentially to build out the next unicorn out of Alberta," Choudhary said, noting that people don't always think such a company can come out of Edmonton. "I really admire a lot of the successful unicorns that have gone through, and I want to be one of them."