The startup that launched in 2020 in London has picked up a large amount of funding to go head-to-head with other on-demand convenience companies. It has raised $200 million in a Series B round of funding, which will be used to beef up its presence in its home market, and to expand into what co-founder and COO Joe Falter describes as more mega cities. In addition to London, the company is currently live in Manchester, Cambridge, Bristol, Amsterdam, Rotterdam, and Paris.
The round is being co-led by Lightspeed, 468 Capital, and BroadLight Capital, with Atomico, Burda and the Formula One champion, Sir Lewis Hamilton, also participating.
There is more that has been reported about this round. The first part of this investment closed last month, and it was also a part of it. Sky News reported last week that a Singapore state fund was one of the backers.
Steve O tells us that PitchBook is wrong. The impact on how we reported this story was unaffected by the fact thatHear was a long time writer for TechCrunch. A Zapp spokesman wouldn't comment on the Singaporean investor.
I will add that Gorillas would be a good name for a delivery startup. The Berlin-based Gorillas raised $1 billion last autumn and like its rival out of Turkey, Getir, has been using some of that money to buy up or invest in would-be competitors in other markets. More generally delivery companies have a track record of investing in each other, which may be the first move ahead of more consolidation. Delivery Hero and DoorDash have invested in German startup Flink.
Zapp is not talking about how many customers it has or how many orders it has processed to date. It has raised $300 million.
The convenience grocery sector in the UK was estimated to be worth $43 billion in 2021.
There are a lot of questions about how this story will play out. How many consumers will use these services? How many customers does a typical grocery store need? How many delivery companies can a single city support?
The more interesting plays in the space are what investors want to back. In addition to the $1 billion raise last year, Flink raised $750 million in December, Zepto in India raised $100 million, Jokr raised $260 million, and GoPuff and Getir raised billions.
A formula that balances customer service, a network of smaller dark stores, and a massive distribution center is what Zapp believes it has found. It will be in the quick delivery space for a long time.
GoPuff or Flink have built their businesses on the belief that mass-market consumers can be persuaded to switch to shop in more frequent, smaller bursts of instant groceries than larger, weekly baskets. Direct marketing is a costly game that many players have been playing.
We are focused on customer experience. Falter said in an interview that that is what will win here. He said that his competitors have chosen to go after market share by offering users multiple discounts to customers. We believe in customer experience, a supply chain that delivers better products and on time, and an assortment that is relevant to convenience, more than trying to disrupt the weekly shop.
He said that the average order was in the region of 20. He said that two-thirds of the orders are profitable.
He said that he would be a little nervous if he were them, and that they were pursuing customer loyalty through multiple discounts.
As the Covid-19 pandemic took a grip on the world, a lot of instant grocery companies came into their own, so this round is about Zapp trying to show that it has a life beyond that.
One of the last segments of retail to move fully online is convenience retail. We are thrilled to be a part of the company's journey as it brings a new experience to customers in the convenience grocery market and continues to invest for the long term.
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