Europe’s instant grocery start-ups deliver frantic summer of dealmaking

Gorilla’s 33-year-old head, Kagan Sumer, had a hot and stressful summer as he cut down and recut deals with some of the world’s biggest players in the booming instant delivery world.

Founded in May 2020, when Europe fought a coronavirus pandemic, Gorilla promised to reinvent grocery shopping by cycling goods to customers within 10 minutes. A year later, it was one of the continent’s most popular start-ups, passing a $ 1 billion valuation and expanding across Europe and even into New York.

But as a result of its rapid growth, it was already short of cash and its rival Getir. Raise $ 550 Million In June, it was ahead in major markets such as London.

Sumer was having a hard time protest About the working conditions of Berlin courier companies, and what some gorillas believe is a promotion campaign by rivals Allegation Of his drug use. He later told technology publication The Information that his use of “performance enhancers” was “past.”

So when Tony Xu, head of US food delivery company DoorDash, flew from California to Germany in late July, Sümer felt it was the last shot of his survival.Both companies will soon I agreed DoorDash contracts to invest hundreds of millions of dollars with a valuation of $ 2.5 billion.

The transatlantic battle to replace convenience stores with a fleet of delivery riders has become the most bubbling tech trend in the last 12 months, with billions of dollars in venture capital funding into US and European start-ups.

But what seemed like a happy conclusion to Gorillas and DoorDash was just the beginning of a few more weeks of desperate trading and breaking as early market players struggled to gain an advantage.

Investors in this sector described the behavior as “movie-like,” while another veteran tech executive is currently using one of the distribution apps, “I’ve never seen such a wild party. “.

“It’s insane, it’s beyond anyone’s imagination,” he said. “Everyone is talking to everyone.”

Today, DoorDash is funded by gorilla rival Flink. Meanwhile, German takeaway giant Delivery Hero rescued the gorilla with a $ 235 million investment that ended this week.

This account is based on interviews with 10 people involved in the merry-go-round. Gorillas, Flink, DoorDash, and Delivery Hero all declined to comment on funding.

Gorilla and door dash fall

It didn’t take long for Gorillas and DoorDash to start arguing about the details of the deal. According to people with negotiating knowledge, DoorDash wanted to limit gorillas from expanding too rapidly in the United States.

German start-ups have also challenged other “accountability” measures designed to encourage Sumer to focus on improving business fundamentals in Europe. Some Gorillas investors felt the term was overwhelmed by anti-competitive behavior and DoorDash was trying to over-control the fate of startups.

Sumer looked for other options. He had already talked about the merger with one of his closest rivals, Flink, and then he struck it with Delivery Hero’s CEO Niklas Östberg.

With hundreds of unique “dark stores” or DMarts capable of delivering groceries to Delivery Hero customers in 35 countries, Ostberg has overcome previous concerns about this sector. twitter, When he compared the gorilla to a cash-burning bubble for scooters.

Gorilla has a high customer retention rate after the pandemic and has rebuilt the top team After the two co-founders left, we invited experienced executives to carry out their finances, operations and talents.

As a result, Delivery Hero provided Gorillas with the cash they needed, while other investors added hundreds of millions more, but significantly diluted shares held by Sümer and other early shareholders. Is likely to be) has not been done yet. was decided.

Would you like to integrate gorillas and flinks?

But even while discussing investments, Delivery Hero has revived the idea of ​​integrating Gorillas and Flink into a $ 5 billion company. Delivery Hero’s largest shareholder, Prosus, had previously invested in Flink, and both Prosus and Delivery Hero were discussing new investments in the merged company.

However, negotiations were set up over branding, management, and the respective interests of the two companies. Prosus did not respond to the request for comment.

Sumer was distracted by the seemingly endless funding negotiations, but Oliver Merkel and his Flink co-founders were trying to bow.

Like Sumer, Merkel used to consult retailers in Bain. Both founders made a big round at record speed for European start-ups. But that’s where the similarities between them mostly end. Two of Frink’s investors say that media shy Merkel is a more mature executive who is less familiar with the high dash of market share.

Eventually, two competing Americans crashed the party. Both were looking at flinks. Gopuff, which raised $ 1 billion in June and already acquired two small grocery apps in the UK, Fancy and Dija, has negotiated an acquisition with Flink. However, some did not reach an agreement over the evaluation. Gopuff declined to comment.

Around the same time, the still clever DoorDash approached Frink after being abandoned on the altar by a gorilla. Merkel had no plans to raise any more money after the $ 240 million round in June, but was fiercely competing with Getil as he saw a gorilla landing a strategic backer on a delivery hero. Made it more open to receiving doordash calls.

DoorDash has agreed to invest $ 400 million in Flink as part of what is expected to be a $ 600 million round.

In terms of DoorDash, which has grown to a market capitalization of over $ 70 billion since its initial public offering in December, Flink is a more stable partner with strong retail experience and ties, including a partnership with German supermarket Rewe. Seems to be offering.

Further shakeouts in the future

As summer turns into autumn, the market for fast food delivery, which rarely existed in Western Europe a year ago, has already begun to shake.

Gorilla and Frink both have the same $ 2.1 billion valuation before including the new funding raised, according to people familiar with the two investments. If all goes according to plan, Getir, Gorillas and Flink will each raise nearly $ 1 billion by the end of the year.

Monthly app downloads from mobile analytics group Sensor Tower show that Flink overtook Gorillas in July and August in Germany. In the UK, app numbers show that gorilla growth in May and June dropped dramatically in August, but Getir grew bigger than all its rivals combined. I am.

Line chart of monthly downloads (000) showing grocery delivery app downloads in the UK

UK-based Jiffy and France-based Cajoo secured $ 28 million and $ 40 million this month, respectively. Atomico-backed Zap is gaining momentum in the UK.

Still, few investors expect more than a few start-ups to survive next year. Some investors are still seeing the possibility of a gorilla-flink merger, even after the dust has settled.

“These are classic land acquisition monopolies where the winner owns the category and has enormous long-term value,” said Ben Narasin, founder of Tenacity Venture Capital, who has not invested in this sector. ..

Additional report by Martha Muir and Dave Lee.

Europe’s instant grocery start-ups deliver frantic summer of dealmaking Source link Europe’s instant grocery start-ups deliver frantic summer of dealmaking

Related Articles

Back to top button