Rohlik Raises $170 Million to Expand into Food Delivery in Europe, Sell Technology to Others
The halcyon days of fresh food delivery startups are over, but those that stuck it out and built profitable businesses are still around and hungry for more 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 the baker can make), sought to stand out. Its focus has been on operating smaller warehouses and building links with local producers and sellers, such as butchers and fishmongers, rather than replicating what a large supermarket might sell online (or even stock in a physical store). In reference to the “Rohlik” in its name, the company bakes bread in its distribution centers.
“To replace Rohlik, you would have to open five different stores,” Tomáš Čupr, CEO and founder of Rohlik, told TechCrunch in an interview. Some 17,000 references are offered via the service, with delivery slots of 1 to 2 hours from the order.
Rohlik said it will serve 800,000 customers in 2023. The plan now is to use the new funding to expand its model in Europe – with a goal of launching it in 10 more cities over the next six years.
Along with expanding its services, the company wants to accelerate the development of its technology, which includes logistics and analytics software, as well as robots for sorting and picking orders, by licensing it to other delivery players to build their own local networks and delivery operations based on what Rohlik has built. Čupr said it would launch its technology platform licensing initiative later this year.
The European Bank for Reconstruction and Development (EBRD) is the lead investor in Rohlik’s latest funding round, with participation from previous backers Sofina, Index Ventures, Quadrille and TCF Capital, as well as the European Bank of investment (EIB) as part of its Scale-Up initiative. The EIB’s share is debt, according to Čupr, who described 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 around $1.3 billion in pre-money valuation. The total amount the startup has raised in equity and debt is now approaching $800 million.
This latest cash injection comes at a difficult time for the grocery delivery industry. The peak of the COVID-19 pandemic was marked by a few years of major attention, funding, and use of delivery services, leading to hundreds of millions of dollars in funding being funneled into different permutations of the model commercial, especially those that seemed particularly novel (like “instant” delivery startups). In 2021 alone, according to investment firm AgFunder, nearly $19 billion was invested in food delivery startups.
Inevitably, after the peak came the trough, with a number of delivery startups disappearing and/or being acquired for pennies on the dollar/pound/euro, combined with many layoffs, downsizing and restructuring.
After years of financing and aggressive growth, the former major player Getir is now focusing, for example, on its home market of Turkey. While its American rival Gopuff is said to have spent $400 million last year. And it’s not just the most obvious instant players who are faltering. Oda in Norway, a large grocery competitor that has also raised and acquired aggressively, has been laying off people in waves and reducing its geographic footprint.
Even Ocado, considered by many to be the gold standard in the world of grocery delivery, has faced weaker profits and partners shelving plans for Ocado-powered warehouses.
Given all this turbulence, Rohlik is both feeling the pressure, but also showing signs of where he might be building defenses while closely monitoring what others are doing. “I know Ocado well,” he noted. “Our financial director is formerly of Ocado.”
Outside of the Czech Republic, the company – which Čupr describes as “20 years in the making” – has operations in Austria, Germany (where it operates under the name Knuspr, as pictured above), Hungary and in Romania. Its business units in its home market, Hungary and Munich are now all profitable. Rohlik said revenues increased by an average of 40% post-COVID-19.
The startup has set itself the goal of reaching 1 billion euros in turnover and positive cash flow by the end of 2024. But it does not disclose what its revenues are at the moment, we cannot so I can’t say if Rohlik’s eyes are bigger than his stomach.
“We first partnered with Rohlik three years ago and have been continually impressed by the management team’s execution and investment in proprietary technologies, automation and the increasing use of artificial intelligence across its operations,” said Tamas Nagy, Director and Co-Head of Equity Investments at the EBRD, in a statement. “We are very proud to support Rohlik’s growth and expansion plans in the years to come.”
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