The golden age of fresh food delivery startups is over, but those that stuck it out and built growing businesses are still around and hungry for 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 can make), has sought to differentiate itself. Its focus has been on operating smaller warehouses and building relationships with local producers and vendors, such as butchers and fishmongers, rather than replicating what a large supermarket might sell online (or even stock in a physical store). In a nod to the “Rohlik” in its name, the company bakes the bread in its distribution centers.
“To replace Rohlik, you would have to open five different stores,” Rohlik CEO and founder Tomáš Čupr told TechCrunch in an interview. Some 17,000 SKUs are offered through the service, with delivery slots of 1 to 2 hours from the time of ordering.
Rohlik said it will serve 800,000 customers by 2023. The plan now is to use the new funding to expand its model in Europe, with a goal of launching 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 Investment Bank (EIB) through 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 infusion of funding comes at a challenging time for the grocery delivery industry. The height of the COVID-19 pandemic saw a few years of major attention, funding, and usage of delivery services, leading to hundreds of millions of dollars of funding being poured into various 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.
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 aggressive growth and financing, Getir, once a major player, is now focusing on its home market of Turkey. U.S. rival Gopuff reportedly spent $400 million last year. And it’s not just the most obvious 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.
Even Ocado, considered by many to be the gold standard in the world of grocery delivery, has struggled with weaker profits and partners shelving plans for Ocado-powered warehouses.
Given all this turbulence, Rohlik is both feeling the pressure and showing signs that she might build defenses by watching what others are doing closely. “I know Ocado well,” he noted. “Our CFO is an Ocado veteran.”
Outside the Czech Republic, the company, which Čupr describes as being founded “after 20 years,” has operations in Austria, Germany (where it operates under the name Knuspr, as pictured above), Hungary, and Romania. Its business units in its home market, Hungary, and Munich, are now all profitable. Rohlik said revenues have increased by an average of 40% post-COVID-19.
The startup has set itself the goal of reaching €1 billion in revenue and positive cash flow by the end of 2024. But it doesn’t disclose its revenue at this point, so we can’t 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 successfully implemented 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 EBRD, in a statement. “We are very proud to support Rohlik’s growth and expansion plans in the years to come.”
