The market for instant grocery delivery is still very frothy, but investors believe that one player will still be standing after the hype dies down.
Flink, the Berlin-based startup that sells food and other essentials at supermarket prices and aims to deliver them in under 10 minutes, has raised $750 million in a Series B round of funding. Flink is present in 60 cities across four countries, where it covers 10 million customers, and the plan is to use the funding to continue growing that footprint, both organically and possibly by snapping up rivals.
The involvement of DoorDash, which went public in December 2020, has a market cap of just under $57 billion, and is making its first entry into Europe with a deal to buy a company in Finland. We can confirm that DoorDash's investment closed in September, with the rest of the round completed in the months following.
Mubadala Capital, which backed Flink in a $240 million round made as recently as June, was one of the investors in the round. German supermarket giant REWE is one of the previous backers.
Flink has only been commercially active for seven months, and has only been around for a year. In a rare interview, the company has been media-shy up to now, but the CEO and co-founder said he believes that part of the reason Flink has attracted attention is because of their track records. The co-founders of Foodora and Fashion for Home are both graduates of Rocket Internet, and both worked in retail and grocery.
We bring experience to the table because we are obsessed with how we do things, and that's why we can win market leadership in a short amount of time. We hope we have learned from the mistakes we have made. One reason for wooing investors could be that he is personable for a media-shy person; that last comment was delivered tongue-in-cheek, as were many of the other quips he made off the record.
This round has been in the works for some months now and the story behind that speaks to the market's current state and where Flink believes it stands out.
The deal to invest in one of Flink's big rivals, Gorillas, fell through due to differences between the two companies' management styles. When DoorDash began talking with Flink, they found that executives were more aligned in their approaches to growth. Gorillas raised money from another strategic, Delivery Hero, as part of a $1 billion round.
Flink was being eyed by both Amazon and GoPuff as an acquisition target.
The approaches didn't go anywhere because Flink's valuation was too high or because Flink wasn't interested in selling. A massive consolidation play that didn't happen at the time was Flink looking at a merger with Gorillas.
If Gorillas and Flink do join up, it will likely be one way or the other, as the many companies in instant delivery that have popped up in the last couple of years struggle to get profitable, reach positive. GoPuff and Getir have been buying up smaller instant delivery companies in Europe.
Flink was close to buying another instant delivery company, Cajoo in France, for the grand sum of 1, before Cajoo decided to raise $40 million.
The above details have been confirmed by executives across the companies.
Flink has been quietly building out a strategy for how it plans to tackle the market, and it starts with how it sources groceries.
It is difficult to compete against Amazon because of the economies of scale that e- commerce has, and groceries need to be procured by the retailers that sell them.
Rather than trying to get to a big enough scale to have the best negotiating power for buying in goods, Flink has been instead partnering with huge retailers and using them for those deals. Flink has followed the same path with its launches in France and the Netherlands, although it has not disclosed who those partners are.
Lionel Souque, CEO of REWE Group, said in a statement that they were supporting Flink with its long-term commitment. The operational cooperation between Flink and Rewe in the area of purchasing continues to develop very positively. Flink is now the number one in Quick Commerce in Germany and is ideally placed to further expand their market leadership, thanks to our partnership with them. The logic was explained to me that the big supermarkets missed the boat on hard discount rivals like Aldi and Lidl, where they didn't anticipate how competitive the latter would ultimately become. The idea is to collaborate earlier and more closely with the next big thing to stay up to date with any growth that may come.
The aim of Flink has been to keep the concept of instant grocery delivery as normal as possible and delivered to as wide a range of consumers as possible, not just young urbanites with disposable cash.
People in big cities are spoiled. When Flink opened in Regensburg, a small town in the south of the country, the amount of business they got was crazy. Our model works everywhere. We want to be a place where everyone can go. Our products appeal to both the fireman and the teacher, and our pricing is supermarket pricing. Normal people. It currently has 2,500 items in its biggest markets and will likely grow that selection over time.
Flink's talent will be worth watching. At a time when there are a lot of scrutiny over the rights of gig workers at the companies where they work, Flink says that it is focused on fully employed riders with unlimited contracts at a massive scale to cope with customer demand.
The company says that its customers are taking multiple orders each week, an engagement metric that caught the eye of DoorDash and will be something to watch as part of how the two companies potentially collaborate together in the future.
Prabir Adarkar, CFO of DoorDash, said that they had been impressed by Flink's growth and customer retention. The team brings a wealth of industry experience and shares our operator mindset. They have established themselves as the leader in key European markets in less than a year.
Flink's funding round is a big deal as it continues its growth trajectory. We are excited to watch them disrupt the instant grocery delivery space, and we look forward to remaining a trusted partner to Oliver, Julian, and their team.
