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It was a sweltering and stressful summer for 33-year-old Gorillas boss Kağan Sümer as he struck and cut deals with some of the biggest players in the booming instant delivery world.
Founded in May 2020 as Europe battled the coronavirus pandemic, Gorillas has vowed to reinvent grocery shopping by cycling customers in 10 minutes. A year later, it was one of the continent’s hottest start-ups, surpassing a valuation of $ 1 billion, spreading across Europe and even New York.
But because of this rapid growth, it was already under liquidity and its rival Getir, which raised $ 550 million in June, had taken a lead in key markets such as London.
Sümer was grappling with protests over the working conditions of his Berlin couriers and what some at Gorillas believe is a campaign by his rivals to spread allegations of drug use. He later told tech publication The Information that his use of “performance boosters” was “a thing of the past.”
So when Tony Xu, the boss of American food delivery company DoorDash, flew from California to Germany in late July, Sümer felt it was his last chance to survive. The two companies quickly struck a deal for DoorDash to invest hundreds of millions of dollars at a valuation of $ 2.5 billion.
The transatlantic battle to replace convenience stores with delivery fleets has become the most hackneyed tech trend of the past 12 months, with billions of dollars in venture capital invested in start-ups in the United States and Europe.
But what might have seemed like a happy conclusion for Gorillas and DoorDash was just the start of several more weeks of frenzied deal negotiations and breakups as emerging market players scrambled to gain the upper hand.
One industry investor described the action as “like a movie,” while another senior tech executive, now working with one of the delivery apps, said he had “never seen such a party. Savage”.
“It’s crazy, it’s beyond anyone’s imagination,” he said. “Everyone talks to everyone. “
Today it was Gorillas ‘fierce rival Flink who received funding from DoorDash, while German takeout giant Delivery Hero came to Gorillas’ rescue with a $ 235 million investment that closed this week.
This story is based on interviews with 10 people involved in the ride. Gorillas, Flink, DoorDash, and Delivery Hero all declined to comment on the funding.
Gorillas and DoorDash fall
It didn’t take long for Gorillas and DoorDash to start quibbling over the fine print of their deal. DoorDash wanted to prevent Gorillas from growing too quickly in the United States, according to people familiar with the negotiations.
The German start-up has also held back other “accountability” measures designed to encourage Sümer to focus on improving its business fundamentals in Europe. Some Gorillas investors felt the terms exuded anti-competitive behavior and that DoorDash sought too much control over the fate of the start-up.
Sümer looked for other options. He had previously discussed a merger with one of his closest rivals, Flink, and then he sympathized with Niklas Östberg, managing director of Delivery Hero.
Östberg, which has deployed hundreds of its own ‘dark stores’ or DMarts, from which it can deliver groceries to Delivery Hero customers in 35 countries, had overcome its earlier fears about the industry, voiced on Twitter, when he compared gorillas to the silver bubble for scooters.
Gorillas had strong customer loyalty even after the pandemic and had rebuilt their best team after the departure of two co-founders, bringing in experienced executives to manage finances, operations and talent.
Delivery Hero therefore offered Gorillas the money he needed, with other investors lining up several hundred million dollars more, although that part of the deal – which appears likely to be highly dilutive to stakes held by Sümer and other early shareholders – has yet to be finalized.
Gorillas and Flink are going to merge?
Even discussing an investment, Delivery Hero revived the idea of merging Gorillas with Flink into a $ 5 billion business. Delivery Hero’s main shareholder, Prosus, had previously invested in Flink and Prosus and Delivery Hero have discussed a new investment in the merged company.
But the talks failed on the brand image, the management and the respective stakes of the two companies. Prosus did not respond to a request for comment.
While Sümer was distracted by seemingly endless fundraising negotiations, Oliver Merkel and his Flink co-founders tried to keep their heads down.
Like Sümer, Merkel previously worked at Bain advising retailers. The two founders raised large sums in record time for European start-ups. But that’s where much of the similarities between them end. Two of Flink’s investors say media-shy Merkel is a more mature executive who has been less libertine in the costly race for market share.
In the end, two competing Americans crushed the party, both with eyes for Flink. Gopuff, which raised $ 1 billion in June and had previously purchased two small UK grocery apps, Fancy and Dija, has had acquisition talks with Flink. But he failed to strike a deal, partly on the appraisal. Gopuff declined to comment.
Around the same time, DoorDash, still angry after being thrown at the altar by gorillas, also approached Flink. While Merkel had no plans to raise more money after a $ 240 million round in June, seeing Gorillas land strategic support in Delivery Hero – and Getir’s aggressive competition – made him more open to calls. by DoorDash.
DoorDash has now agreed to invest $ 400 million in Flink, in what is expected to be a $ 600 million round.
From DoorDash’s perspective, which has seen its market capitalization grow to over $ 70 billion since the December initial public offering, Flink seemed to offer a more stable partner with a solid track record and retail relationships. , including a partnership with the German supermarket Rewe.
More shake-outs to come
As summer turns into fall, the market for fast grocery delivery, which barely existed in Western Europe a year ago, is already starting to change.
Gorillas and Flink both now have the same valuation of $ 2.1 billion, before including the new funds raised, according to several people familiar with the two investments. If all goes according to plan, Getir, Gorillas and Flink will each have raised nearly $ 1 billion in funding by the end of the year.
The Sensor Tower mobile analytics group’s monthly app download figures show Flink topped Gorillas in July and August in Germany. In the UK, app figures show Gorillas’ incredible growth in May and June fell dramatically in August, as Getir rose to prominence than all of his rivals combined.
New players are still coming in: UK-based Jiffy and France-based Cajoo got $ 28 million and $ 40 million respectively this month. Zapp, backed by Atomico, is gaining momentum in the UK.
Yet few investors expect more than two or three startups to survive next year. Some investors still see the potential for a Gorillas-Flink merger once the dust settles.
“These are classic monopoly land grabbing deals where the winner owns the category and have tremendous long-term value,” said Ben Narasin, founder of Tenacity Venture Capital, which has not invested in the sector.
Additional reporting by Martha Muir and Dave Lee.
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