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This Food Delivery Startup Raised $10 Million to Help College Kids Make Extra Cash

When Floodgate partner Ann Miura-Ko received an email about yet another new delivery startup entering the market, she almost immediately hit “delete.”

Miura-Ko, who was an early lead investor in Lyft and TaskRabbit, had received an email last year from a fellow investor at Norwest Venture Partners encouraging her to look at a new company called JoyRun. The first sentence read: “This is a food delivery company, but before you delete the message, just hear me out.”

“I had to laugh because I had looked at many of these food delivery businesses fairly early on, and I just couldn’t get my arms around the unit economics,” Miura-Ko says. “For the large part, I had given up on food as an area until I learned about JoyRun.”

JoyRun announced Tuesday that Floodgate is leading its $8.5 million Series A round. (The company also raised $1.3 million in seed funding led by Norwest Venture Partners back in 2014.)

It’s JoyRun’s business model that convinced Miura-Ko to invest. Food delivery services such as DoorDash, GrubHub, and Postmates pay drivers to pick up food from restaurants or stores and deliver door-to-door, while JoyRun uses a peer-to-peer delivery model to maximize efficiency and cut costs.

“Today’s on-demand delivery services are a premium — they’re the Uber Black,” says Manish Rathi, JoyRun founder and CEO. “We are the Uber Pool version.”

Here’s how it works: A user downloads the app and logs in through Facebook to become a member of the JoyRun community. From there, he can toggle between the “buyer” and “runner” versions of the service. When a “buyer” opens the app, he can tack his order onto a “runner” who is going to a nearby restaurant. “Runners,” on the other hand, announce they’re taking orders and wait for people to place their orders. They then set a delivery fee that ranges from $0 to $5 and deliver the food to a central location, like the lobby of a dorm room. Users can clarify their orders and add special requests through the app’s in-chat feature.

This model works well on college campuses because it allows students to seamlessly make cash by picking up food or coffee for their dorm-mates or sorority sisters, says Rathi. In a Cornell Daily Sun article, a student at Cornell University said JoyRun’s appeal over its food delivery competitors is that it doesn’t have minimums, menu restrictions or markups.

The service is currently available on 50 college campuses across the country, including U.C. Davis and the University of Alabama. Today, the company is opening the floodgates to allow students at any university in the country to “unlock” the app, provided 25 people at the school are willing to sign up as members.

Currently, students place roughly 10,000 orders per week across campuses, and the company takes a 3% to 15% cut from each order of more than $5. Rathi says JoyRun is growing 50% in terms of order volume month over month.

That level of traction is good news for JoyRun, which is laser-focused on fast growth and user acquisition. Rathi says the company will use the fresh capital to hire additional employees, build out its technology, and continue its aggressive college expansion. In the summer, JoyRun expects to start testing its model at large corporate office campuses as well.

For this startup to be successful, scale is key. Although it has found success at large universities, it’s unclear how JoyRun will perform at smaller schools that might not have an active Greek Life or a large concentrated base of students who live on campus. Additionally, the service works well for short-term goals such as raising money for a concert ticket or paying a small bill, but it doesn’t typically allow the majority of its users to earn as much as they would being an Uber driver, for instance.

But that’s exactly the point, says Rathi.

“Not all of us are ready to become delivery drivers and go door-to-door,” he says. “While the rest of the world is struggling to get drivers to work for them, we’re giving flexibility to anyone in the community.”