Investors and VCs predict which super-delivery startups will survive, and share startups that are shaken by layoffs, running out of money, and recessions.


  • A model succeeded in Europe, and a quick delivery startup entered the United States a year ago.
  • In less than five months, three players were closed: Buyk, Fridge No More, and 1520.
  • Analysts and VCs interviewed by Insider say those with sufficient capital will be able to hold out.

Investor skepticism about startups offering super-fast grocery delivery has grown over the past few months, before open markets plummeted and talk of a potential recession became commonplace.

Now, the fast burnout model of fast growth and fast shipping has gone out of fashion as investors look to generate cash and invest their money in sustainable businesses. This, along with the rapid closure of several New York businesses, put strange pressures on those previously able to raise billions of dollars.

The first high-speed player to crash in the United States was the 1520, which shut down in December. So far this year, Fridge No More and Buyk have closed their doors for not raising more money, and UK delivery service Jiffy has stopped delivering and has switched to a software company. From the once crowded scene, only the four main players remain in America: Gopuff, Gorillas, Getir, and Jokr.

Previously, Insider reported that these companies are also facing a headwind. Gorillas are struggling to raise funds at high valuations, News broke on Tuesday of the layoffs of 300 employees.. Jokr offers a greater cash cushion to help get through difficult times, considering the funding rounds currently driven primarily by investors. Gopuff suffered layoffs of its own, and sources say Getir ran out of $60 million a month in cash.

Now, a better pitch for investors is to highlight the balance sheet rather than the growth indicators. Getir has attracted most of the companies from Europe, and Philadelphia-based Gopuff has $2 billion in the bank, which he says is a huge advantage for investors.

However, many investors I spoke to Insider were largely skeptical of the category. One late venture capitalist said he wouldn’t even have a meeting with the delivery company. Others who were skeptical of this category said the timing couldn’t be better.

Rick Heitzmann, founder of FirstMark Capital, said, “These companies were all of 2021 and not all of 2022.”

“Companies with a lack of capital will not be able to get the next funding round to survive because no one is making meaningful money today,” said Burt Flickinger, managing director. said Strategic Resource Group, a New York-based retail consulting firm.

Gary Hawkins, CEO of the Center for Advancing Retail & Technology, agreed.

“Given the economic situation and what’s going on in the investment community, all these companies now have a limited window of visibility into it,” he said. “The days of cheap money are gone.”

Here are the thoughts of analysts and investors, as Insider spoke about the relative prospects of the major ultra-fast startups that still stand.

gopoof

Last fundraising: $1 billion worth of $15 billion
Total fundraising amount: $3.4 billion
Key Investors: SoftBank, D1 Capital Partners and Fidelity

Philadelphia-based Gopuff is the most well-funded of the superfast players with around $2 billion in banks, said several people who know about the matter. That means losses of more than $100 million are expected this year, but there are plenty of runways that can withstand a prolonged recession.

According to Gordon Haskett analyst Robert Mollins, Gopuff is a strong player because it has been on the market for a long time, operates nationally and has expanded its delivery model to include more lucrative products such as spirits and ready-to-eat pizza.

“We’re in the best position in the US for a fast delivery space or anything for fast delivery,” Mollins told Insider.

He emphasized Gopuff’s shift to food prepared in a striking way. In early May, Gopuff introduced a pizza line called The Mean Tomato prepared by Gopuff Kitchen in the United States.

Mollins said the pizza “doesn’t look very appealing,” but it’s still a good play. This is especially true in college towns, the market where Gopuff performs best. Data shows that when consumers order food prepared from Gopuff Kitchen, 90% of those orders include non-kitchen items, he said.

“So if you order a pizza, 9 out of 10 times you’ll end up ordering an extra at the convenience store,” he added.

But Gopuff is laying off employees and restructuring its business. The move came as the company was considering an IPO this year. now excludedTechCrunch reported.

“Just a few weeks ago I would have said Gopuff seemed to be the best,” said Laura Kennedy, analyst at CB Insights. “But there seems to be a lot of confusion right now.”

Gorilla

Last fundraising: $3 billion worth of $1 billion
Total fundraising amount: $1.3 billion
Key Investors: Delivery Hero, DST Global, Dragonier

Berlin-based Gorillas is in a fundraising round but is entering a tough environment. Investors were already skeptical about whether they could raise the value close to the $5 billion the startup is demanding, Insider reports.

And It was before the news that the company had laid off 300 employees., which includes half of the company’s employees. He also said several European countries, including Denmark, Italy and Spain, are considering a withdrawal.

According to a source familiar with his thinking, CEO Kağan Sümer recently announced his intention to merge with Jokr. However, Jokr CEO Ralf Wenzel is not interested at this time, said two people familiar with the matter. Given the current environment, these discussions could heat up, at least on Gorilla’s side.

Gordon Haskett’s Mollins said Gorillas were “one of the weakest players right now” but didn’t believe they would close “soon”.

Mollins said Gorillas only operates in one U.S. market and needs to “focus on other markets” to compete with express delivery companies that have camped out in Chicago, Boston and San Francisco.

CB Insights’ Kennedy says another way to grow the business is to expand its partnership with British grocery company Tesco.

Under the partnership, Gorillas will use the Tesco store’s “juxtaposed warehouse” to fulfill orders.

This model minimizes Gorillas’ inventory holding and dark store operating costs, so it would be a smart financial move if the startup adds more stores to the pilot, Kennedy said.

“These companies need some size behind the scenes,” Kennedy said. “That kind of partnership can be really exciting to help both parties involved.”

However, if Gorillas is unable to raise significant capital, it may have to take sharp steps to cut spending, including closing some operating areas and halting promotional deals, which are key ways for ultra-fast players to attract customers.

getir

Last fundraising: $768 million worth of $12 billion
Total fundraising amount: $1.8 billion
Key Investors: Sequoia, Mubadala, Tiger Global

Getir has the advantage of raising a significant amount of capital and running a strong business in its home country, Turkey.

Mollins said Getir will do well after announcing a massive $768 million raise in March. Mollins said the capital inflow was “on the verge of everything starting to hit the fans,” and the market started to fluctuate.

However, the burning rate is high. Insiders previously reported that the company suffered a loss of $60 million a month earlier this year. They have significant capital, but to compete in the long run, they need to significantly lower their burn rates.

However, the company has a lot of wealthy investors, including Sequoia Capital as well as the sovereign wealth fund in Abu Dhabi, UAE. If the company needs to raise money, it can utilize it for an internal round, which can help withstand a recession.

jokr

Last fundraising: $260 to $1 billion worth
Total fundraising amount: $430 million
Key Investors: Activant Capital, GGV, Tiger Global

New York City-based Jokr raised $260 million in December, just before the fundraising mood deteriorated.

With the burn rate, the company has 18 months of equity in the bank, according to someone familiar with the matter. Companies can extend runways by reducing costs. It lags far behind its New York rivals.

CEO Wenzel more recently came up with the idea of ​​raising half that amount in another tranche. According to two sources familiar with the matter, current investors will lead with the hope that new ones will join in.

Gordon Haskett analyst Mollins recently start A platform for self-service advertising.

Launched in mid-May, the media platform allows advertisers like Kellogg’s to bid for a more personalized and relevant PPL when consumers search for specific products in the Jokr app.

“Grocery is usually a very low-margin business. Advertising has very high margins,” said Mollins. “So this is really necessary to increase margins and make it look like a tech company rather than a traditional grocery store that actually delivers food by bike.”

Another advantage of Jokr is its assortment of basic groceries and fresh produce, Mollins said.

“They really worked hard for the real express delivery company, not the express convenience store,” he added.

This led to better basket sizes compared to rivals.

According to the transaction data Ernest tracked, the Joker has a larger average ticket size than Gorillas and Gopoofs. The average ticket price for April was $36.17 for Joker, $27.16 for Gopuff and $31.22 for Gorilla. In comparison, the average April order size for large e-commerce company Instacart was $108.69. Ernest does not track Getir.

“But the most important thing about Jokr is that it’s actually completely positive at the group level in all countries after 12 months of operation,” said Mollins, referring to an interview with Wenzel. TechCrunch, 21 April.

Mollins said Jokr “looked very strong” thanks to “a pretty good job of trying to look a little different from the pack”.

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