Rohlik Raises $170 Million to Expand into Food Delivery in Europe, Sell Technology to Others

The halcyon days of produce delivery startups are over, but those that stayed the course and built profitable businesses are still here and hungry for further growth. On Friday, one of those survivors, Czech food delivery company Rohlik, announced $170 million in new funding.

Rohlik – which means “baker” in Czech (and as small a bread as a baker might make) – aims to carve out a differentiated position in the market. The focus has been on smaller warehouses and building relationships with local producers and vendors like butchers and fishmongers, rather than replicating what a large supermarket might sell online (which mirrors what you might find in a physical supermarket). In a nod to the Rohlik in its namesake, it makes bread in the distribution centres.

“To replace Rohlik, we would have to open five different stores,” Rohlik CEO and founder Tomáš Čupr said in an interview. The offer includes about 17,000 references, with delivery slots of 1-2 hours from the time of ordering.

Rohlik said it will serve 800,000 customers by 2023. Now the plan is to use the funding to expand that model across Europe – with a target of 10 more cities in the next six years.

Alongside this, the company wants to fully exploit its technology, which includes logistics and analytics software and robots for sorting and order picking, by licensing it to other delivery players for that they build their own local networks and delivery operations along the lines of what Rohlik built. Čupr said it will launch its technology platform licensing initiative later this year.

The European Bank for Reconstruction and Development (EBRD) is the lead investor in this latest round, with participation from previous backers Sofina, Index Ventures, Quadrille and TCF Capital, as well as the European Investment Bank (EIB ) as part of its Scale-Up initiative. The EIB’s share is debt, Čupr said, describing it as a “minority” of the total amount.

Čupr declined to give a valuation for this round, but from what we understand, it’s higher than previous valuations but less than $2 billion. To put it in context, the last major funding round Rohlik raised was in 2022, and it came in at what we now know to be about $1.3 billion before cash. The amount Rohlik has now raised in equity and debt is approaching $800 million.

This latest injection comes at a challenging time for the grocery delivery industry. The height of the Covid-19 pandemic saw several years of major attention, funding and usage of grocery delivery services – leading to hundreds of millions of dollars of funding being pumped into different permutations of the business model, particularly those that seemed particularly innovative, like “instant” delivery startups. In 2021 alone, nearly $19 billion was invested in grocery delivery startups, according to investment firm AgFunder.

Perhaps inevitably, after the peak came the trough, with the disappearance of a number of startups, bought out for pennies on the dollar/pound/euro, numerous layoffs, redundancies and restructuring.

After years of aggressive funding and growth, Getir is now focusing on its home market of Turkey. GoPuff reportedly burned through $400 million last year. And it’s not just the most obvious instant players that are giving in. Norway’s Oda, a big grocery competitor that has also been aggressively raising and acquiring, has been laying off people in waves and shrinking its geographic footprint as well.

Even Ocado, considered by many to be the global benchmark, has faced weaker profits and the suspension by its partners of their Ocado-powered warehouse projects.

In this turbulence, Rohlik is both feeling the pressure and showing signs of where he might build defenses while keeping a close eye on what others are doing. “I know Ocado well,” he said, “our CFO is an Ocado veteran.”

Outside of the Czech Republic, the company, which Čupr describes as “a 20-year journey,” also has operations in Hungary, Austria, Germany (where it operates as Knuspr, as pictured above) and Romania. He said operations in its home market of Hungary and Munich are now all profitable. The company said its revenues increased by an average of 40% after the pandemic, and that it has set a target of €1 billion in revenue and positive cash flow by the end of 2024. It does not disclose revenue figures at this time, however, so we cannot say whether Rohlik is biting off more than he can chew.

“We partnered with Rohlik three years ago and have been continually impressed by how the management team has executed its investments in proprietary technology, automation and the increasing use of artificial intelligence across its operations,” said Tamas Nagy, Director and Co-Head of Equity Investments at the European Bank for Reconstruction and Development (EBRD), in a statement. “We are very proud to support Rohlik’s growth and expansion plans in the years to come.”