By Kennedy Rose – Digital Producer, Philadelphia Business Journal
A startup founded by two Drexel University graduates raised nearly $1 million in an oversubscribed seed round to expand its convenience store delivery platform’s footprint and hire young, local talent.
Lula offers delivery from convenience stores and bodegas through existing delivery platforms like DoorDash, GrubHub and Uber Eats, as well as through its own platform. The Philadelphia startup will use the newfound investment to gear up for a Series A in 2022, co-founder Adit Gupta said.
“Our aim is really to get to a point where we can raise a Series A by next year and be able to ramp up hiring and get 10 to 20 more folks on the team,” Gupta said.
Getting to that Series A will require the company to be closer to having 500 to 700 stores in its client base, Gupta said. The startup has seen fast growth since its launch in June 2020, with Lula working with more than 100 stores, he said. Gupta declined to share Lula’s revenue or the exact number of clients the company has.
The year-old startup initially sought to raise about $500,000, Gupta said. PECO parent company Exelon, venture capital firms Plug and Play Ventures and SOSV and several angel investors participated in the round.
Exelon’s investment in Lula stems from its Climate Change Investment Initiative, or 2c2i, which invests in startups that benefit the environment. Lula supplies its vendors with recyclable paper bags for delivery to cut down on plastic waste. Plug and Play and SOSV were early investors in companies like Dropbox and PayPal.
Gupta isn't trying to replicate the business model of Gopuff, another Philadelphia-based company founded by Drexel alumni that delivers convenience store goods directly to consumers through its app. Gopuff has grown rapidly, with a "unicorn" valuation that more than doubled to $8.9 billion this year and expansion to Europe. Gupta, 23, said he's met with Gopuff's founders during his time at Drexel and that he "loves" the company.
Lula largely caters to helping stores, Gupta said, and also focuses more heavily on suburban consumers than other delivery companies. Lula is seeking out stores that risk going out of business if they don't have a delivery component, he said. Also differentiating Lula from other delivery services is the ability to order from a number of apps, Gupta said. Consumers will ultimately have a preference for a particular delivery app, whether that be DoorDash, Uber Eats or Grubhub, and the company wants them to have the same experience no matter which delivery app they choose.
“What we’re doing is, instead of competing with these brands — we actually love these brands — we’re actually just giving convenience to customers, letting them order from any app,” Gupta said.
Founded by Gupta and fellow Drexel graduate Tom Falzani, Lula launched last summer after Gupta’s family’s convenience store in Clementon, New Jersey closed due to the pandemic. Without a way to sell the store’s remaining products online, Gupta and Falzani sought to build a platform where convenience stores could add online shopping and delivery to their business models.
The goal is to equip stores that carry several thousand items with the ability to deliver within a 5- to 10-mile radius, Gupta said.
Lula is live in stores in Philadelphia, New Jersey, Florida and New York. The startup is seeking convenience store clients in college towns, cities and densely-populated suburbs in its existing markets, and it’s looking to launch in stores in Connecticut and the Washington, D.C., area, Gupta said. Further expansion into Philadelphia and its suburbs, like Lower Merion and Bala Cynwyd, is also on the agenda, he said.
The company has clients with just one store and others with dozens of locations. Lula is testing its proof of concept with potential clients who own hundreds, Gupta said. Lula’s clients make between $2,000 and $4,000 monthly through the delivery platform, he said, and the company charges a monthly subscription fee rather than taking commission like other delivery apps.
“If a store makes $4,000 from the stuff that’s worth $4,000, we will give them $4,000,” Gupta said. “We’re not going to take a penny from it.”
Lula will bring on six or seven people, with three to four positions in leadership roles — including supply chain, operations and marketing — and the rest serving as part-time or contract workers, he said. Director-level roles will be filled by experienced candidates, Gupta said.
The company plans to hire recent Drexel graduates to staff the growing startup. Both Gupta and Falzani participated in Drexel’s co-op program when they attended the university, and Gupta expects to hire several Drexel students and other young talent in sales, marketing and technology positions.
“These are people coming right out of college who may not want to work for a large corporation but want to have an impact, on a national level, on the backbone of America’s GDP through convenience stores and retail stores and mom and pop retail stores and prevent them from closing,” Gupta said.