🛵 Grocery delivery madness
October 25th, 2021 - October 29th, 2021 - 5-min read
Good morning Upscalers’ followers.
Time to bring you the 4th edition of our weekly journal. This week, we’ll talk about grocery delivery madness.
As always, feel free to like, comment, react and respond. Thanks for reading!
And if you enjoy our content, why not join Upscalers as a member?
Grocery delivery madness
Last week, we mentioned Gorillas $1B Series C round, and we promised to focus on grocery delivery in this week's newsletter.
Here we go ⬇️
First, let's remind some of the biggest rounds in the industry this year:
- Gorillas 🇩🇪, Sep. 2021, $1B Series C
- Cajoo 🇫🇷, Sep. 2021, $40M Series A
- Getir 🇹🇷, Jun. 2021, $555M Series D
- Flink 🇩🇪, Jun. 2021, $240M Series A
- Getir 🇹🇷, Mar. 2021, $300M Series C
- Gorillas 🇩🇪, Mar. 2021, $290M Series B
- Flink 🇩🇪, Mar. 2021, $52M, Seed
- Getir 🇹🇷, Jan. 2021, $128M, Series B
Crazy.
Why is there so much funding going to grocery delivery platforms?
The first, obvious answer I see is growing market demand for ecommerce, including groceries, due to Covid.
The second answer is more linked to the nature of the grocery delivery business. Such businesses are very cash consuming: they require a lot of CAPEX straight ahead to cover for high inventory costs (storage facilities, refrigiration...), and high OPEX to maintain stocks.
Not only do grocery delivery platforms live on low margins due to high OPEX and CAPEX... but they also need to spend much of their money in marketing and brand awareness to attract consumers... which in turn have very little loyalty to their business.
I discussed this with members of Upscalers from London this week during our drink, and I liked how Francesco Lucherelli framed it: "my choice as a consumer goes to the platform where I get the best promotional offer".
So that's the deal. To me, this very much seems like a dog-eat-dog business where players have very little option to differentiate but to compete on price.
Yet, we recently came across a startup called Macai, focused on Italy 🇮🇹, which vision was that consumers would be more loyal to a platform where they would have wider options for quality products, with a great UX.
Focus on offer rather than price and speed. That's an interesting take.
Yet, apart from price and delivery speed, this business seems to rely heavily on suppliers, logistics and distribution. In the long run, how are they going to compete on logistics with Amazon or on offer with Cajoo now that it is backed by Carrefour (if they are willing to enter the Italian market)?
In the end, I am more into Jow's vision of aggregating online groceries based on a customized menu, which kinds of lock the consumer in the app as switching costs are higher (plus they don't have any inventory cost to support).
But well, let's see how many grocery delivery players can we handle... and for how long.
All eyes on the EU... and elsewhere
What a crazy week again...
VC funding is not everything 🇫🇷
I want to share the story of Lemlist, French sales marketing automation software, which crossed $10M ARR this week.
Lemlist is fully bootstapped.
After Mailchimp's IPO earlier this year, this is yet another example that startups are not meant to receive funding but to grow. And some are better off not raising any money.
EdTech, EdTech, EdTech 🚀
If you read us last week, you might remember that we made a whole case about EdTech being on the rise.
Well this week's news will not contradict us:
First, Udemy, online learning platform created in San Francisco, just started trading its 14.5M shares on the Nasdaq this Friday, at $29.00 per share. They target a valuation between $3.71B and $4.05B, up from the $3.3B the company was valued at during its 2020 Series F.
Second, TikTok is rolling out a new tipping feature for selected creators. This feature will allow creators to accept money from fans (on top of TikTok LIVE streams where gifting is already supported). The feature will first be tested on 100K creators "with good standards on the platform", and then be rolled out to the entire platform.
Though it is not clear what the company means with "good standards", this is yet another sign for Formr that there is a market for content creators who wish to monetize the (educational?) work they do online.
Facebook becoming... Meta 🤔
You probably heard this already. Yoann Benhacoun shared articles in our Whatsapp Teams which were intensely debated.
But I wanted to share this for those who are not part of a Team. Facebook will undergo a major corporate rebranding, changing its name to Meta, to assert its focus on the Metaverse (while still batteling a deepening PR crisis and growing regulatory scrutiny).
➡️ To New-York Times article
We will dedicate a whole section of this newsletter to the Metaverse next week. Keen on hearing your thoughts about this guys.
Sequoia building a new venture funding model 🆕
Venture capital is the industry for funding innovations... but it rarely innovates itself.
Yet Roelof Botha (Partner at Sequoia) stated last Tuesday that "the VC model is outdated" because it does not allow VC funds to support great founders on the long-term (especially post-IPO), as it prompts funds to sell their shares too early.
So Sequoia completely reviewed its structure. Here's the vision behind it:
"LPs will invest into The Sequoia Fund, an open-ended liquid portfolio made up of public positions in a selection of [their] enduring companies. The Sequoia Fund will in turn allocate capital to a series of closed-end sub funds for venture investments at every stage from inception to IPO. Proceeds from these venture investments will flow back into The Sequoia Fund in a continuous feedback loop. Investments will no longer have “expiration dates."
Thanks again for reading guys
See you next week 👋
Tim