The Istanbul-based online grocery startup Getir has completed the purchase of its German competitor Gorillas in a transaction that places a value of $10 billion on the combined company. This comes at a time when competition is heating up among companies that offer fast delivery app services.
Successful European Startups Merge to Create Convenience Store Transport Giant
Two of Europe’s most successful start-ups, both of which have grown substantially as a result of the surge in venture capital funding that has occurred since the pandemic of 2020, have merged in order to extend their range of offerings.
They now have the ability to transport things from grocery stores and convenience stores in as little as ten minutes.
Because investors are no longer willing to put money into software firms that are losing money, a number of smaller grocery applications have already shut down or been sold.
Getir, Gopuff in the United States, and Flink in Germany are the only remaining major companies in the business at this point.
In a statement that acknowledged the acquisition but did not provide any details about the financial terms, Getir’s creator Nazim Salur stated, “Markets go up and down, but consumers prefer our service, and convenience is here to stay.” Getir is now a part of the Getir family.
The need for speedy meal delivery services such as Getir’s, which the company launched seven years ago, will continue to rise in the coming years.
According to those who are familiar with the circumstances, the value of gorillas will drop from $3 billion in September of the previous year to approximately $1.2 billion as a direct result of the purchase.
Getir’s Value Drops by $2 Billion After Adding Gorillas
Additionally, Getir is lowering its own estimate of the price by around one fourth. Getir had a market value of $11.8 billion when it successfully raised more than $800 million in March; however, the new business, which includes the Gorillas, only has a market value of $10 billion. As a consequence of this, the value of the Getir company has increased to $8.8 billion.
According to these insiders, about $40 million will be paid out in cash to a number of Gorillas’ backers, including Delivery Hero, Coatue Management, Tencent, and DST.
In addition to their existing equity position in Getir, they now have this stake. However, due to the decline in value, it is probable that some of the people who backed Gorillas will not get any of their original investment money back.
Layoffs are expected to occur as a result of the fact that the two companies share a significant amount of ground in their network of small urban warehouses or “dark stores” in cities such as London, Paris, Amsterdam, and Berlin.
In addition, Kaan Sümer, who has served as CEO of Gorillas both currently and in the past, has announced that he will be leaving the company in 2020. Sümer formerly worked for Bain.
Getir is able to reduce the cost of acquiring new consumers, improve the efficiency of the operation of its dark stores, and negotiate more favorable pricing terms with its suppliers if it eliminates a competitor.
Grocery apps still going strong despite inflation
By the middle of the year 2021, the United States and Europe each had more than a dozen different fast grocery apps, but only a select number of those applications were still being operated by a single business.
Even though inflation is increasing, investors in the remaining players are confident that consumers who have a lot of money but not much time will still be prepared to pay more for the convenience of having everyday products delivered promptly. This is despite the fact that inflation is increasing.
According to those in the know, Getir’s goal for the beginning of the following year is to raise further capital from investors such as Mubadala Investment Company, Sequoia Capital, and Tiger Global.
Gorillas was forced to try to sell itself since it had ran out of money after suffering significant financial losses over the course of the summer.
Last month, individuals acquainted with the financial situation of Gorillas stated that the Berlin-based company had spent virtually all of the $1.3 billion in capital that it had raised.
At its height, it incurred losses of tens of millions of dollars each and every single month, with a loss of 1.50 times the amount of net revenue it generated.
Getir Secures Loan to Stay afloat during Investigation
According to one of Getir’s sources, the company secured a loan in order to continue operating normally over the duration of Getir’s investigation.
It’s been nearly a year since the stock prices of publicly traded meal delivery firms including Delivery Hero, Deliveroo, Just Eat Takeaway, and DoorDash plunged by more than 60 percent. Companies like these include:
When Delivery Hero started offering deliveries from “dark stores” in 2019, a lot of people became curious about how handy it is to get food delivered to their homes.
Deliveroo’s grocery delivery service known as Hop was introduced in the United Kingdom the year before last with the assistance of big retailers such as Morrisons.
In both the United States and the United Kingdom, Uber has formed a partnership with the on-demand delivery service Gopuff. Getir and Just Eat Takeaway have formed a partnership in the European market.
Alongside DoorDash, the prominent investor Prosus has made a sizeable financial commitment to the food delivery service Flink. Prosus is one of the most active investors in the food delivery app industry.