Getir, the Istanbul-based online grocery startup, has completed its acquisition of German rival Gorillas in a deal that values the combined group at $10 billion, as app market consolidation fast delivery is accelerating.
The deal brings together two of Europe’s biggest beneficiaries of the pandemic’s start-up funding boom, together raising more than $3 billion from venture capitalists since 2020 to expand their grocery and item delivery services convenience store in as little as 10 minutes.
But as investors turned on loss-making tech start-ups, several smaller grocery apps have already shut down or been sold off, leaving Getir, American Gopuff and German Flink as the last surviving big players in the industry. .
“Markets go up and down, but consumers love our service and the convenience is here to stay,” Nazim Salur, founder of Getir, said in a statement confirming the deal without disclosing financial terms. “The super-fast grocery delivery industry is set to grow steadily for many years to come and Getir will lead this category which she created seven years ago.”
The deal values Gorillas at around $1.2 billion, according to people familiar with the terms, up from $3 billion in September last year.
Getir also cuts its own valuation by around a quarter. After Getir reached a valuation of $11.8 billion when it raised nearly $800 million in March, the new combined entity is valued at $10 billion, with Gorillas accounting for 12% of the total. This left the existing Getir business valued at $8.8 billion.
Some of Gorillas’ investors — including Delivery Hero, Coatue Management, Tencent and DST — will receive around $40 million in cash, in addition to Getir’s equity, those people said. However, given the falling valuation, it is likely that some backers of Gorillas will end up with little or no return on their investment.
Job cuts are expected due to the considerable overlap between the two companies’ network of small urban warehouses or “dark stores” in cities such as London, Paris, Amsterdam and Berlin.
Kağan Sümer, the former Bain consultant who co-founded Gorillas in 2020 and served as its chief executive, is also expected to leave the company.
Eliminating a competitor will allow Getir to reduce its customer acquisition costs and gain efficiencies in its dark stores and supplier relationships.
After more than a dozen quick grocery apps launched in the US and Europe in mid-2021, only a handful of independent players remain.
As competition recedes, investors in surviving players remain optimistic that cash-rich, time-poor consumers will still be willing to pay a premium for the convenience of near-instant delivery of necessities, even in period of high inflation.
Getir, whose backers include Mubadala Investment Company, Sequoia Capital and Tiger Global, hopes to raise more funds early next year, according to people familiar with his plans.
As seed funding dried up at the end of the summer, Gorillas’ heavy losses forced it to look for a buyer.
People familiar with Gorillas’ finances said last month that the Berlin-based company had spent nearly all of the $1.3 billion it had raised. It was losing an average of €1.50 for every euro it generated in net revenue, burning tens of millions of euros a month at its peak.
The company took out a loan to keep the business going while Getir completed its due diligence, a person said.
Publicly listed food delivery companies such as Delivery Hero, Deliveroo, Just Eat Takeaway and DoorDash have all seen their share prices fall by around 60% in the past 12 months.
They’ve all shown growing interest in grocery delivery, after Delivery Hero became the first to open dark stores in 2019.
Last year, Deliveroo launched Hop, a grocery delivery service, in partnership with supermarkets such as Morrisons in the UK. Uber has partnered with Gopuff in the US and UK, while Just Eat Takeaway has partnered with Getir in Europe. DoorDash has taken a significant stake in Flink alongside Prosus, one of the world’s largest investors in food delivery apps.