Food delivery startup, SpoonRocket – one of the first such companies to deliver food cooked in its own kitchens, announced through a company blog post that it is shutting down operations amid growing competition and its failure to secure necessary funding.

 

Founded in 2013 through the Y Combinator business incubator, the Berkeley, California-based company has raised a total of $13.5 million through two rounds of funding from investors including Foundation Capital, General Catalyst Partners, Base Ventures, Sherpa Ventures, and Funders Club, according to Bloomberg.

 

TechCrunch reports that the company is planning to liquidate material assets to pay back a portion of what it owes creditors, however, it has no capital on hand to pay back to investors.

 

The company stated in its announcement, “We continued to face intense competition from competitors like Sprig and an ever-tightening funding environment…We explored all strategic options till the very last minute, but unfortunately, they all fell through.”

 

Although the company achieved a positive operating margin, it was lacking the funding to continue operating. Co-founder, Steven Hsiao told TechCrunch that the company had been in negotiations with an unnamed quick service restaurant chain to acquire it, but the restaurant chain pulled out of the talks before a deal could be finalized.

 

The food prep and delivery space has become increasingly crowded and competitive for funding. Overall, food tech startups raised $5.7 billion last year, according to CB Insights amid a surge of recent acquisitions, reports Bloomberg.

 

The company states it will shift its customers to San Francisco-based rival, Sprig, which of offering SpoonRocket customers a user discount.

 

“With competitors like Sprig, it’s a challenging arena for us, given the amount of capital we raised,” Hsaio told TechCrunch. “We raised about $13 million but were competing with services that have a little more capital.”