Wave of consolidation is rolling in
Investors are pumping more and more money into Flink
By Juliane Kipper
April 18, 2024, 3:15 p.m
The fast delivery service Flink secures a cash injection of $100 million. But the market is competitive and the competition is breathing down the startup’s neck. At the same time, the company is negotiating with potential merger partners.
The investors in the fast delivery service Flink have committed to pumping an additional $100 million into the German startup so that it can continue to grow. This is reported by the financial portal “Bloomberg” with reference to a person familiar with the matters. According to this, around a third of the financing has already been received. The company is also in discussions with potential merger partners, it said. The payment of the other two tranches depends on how the sales negotiations with the Turkish interested party Getir and the Dutch food supplier Just Eat Takeaway go.
The financing round was led by Flink’s existing backers, including German grocer Rewe and venture capitalists Bond, Northzone and Cherry Ventures, Bloomberg quoted its source as saying. The Abu Dhabi sovereign wealth fund Mubadala Capital, also a Getir backer, and the American food delivery company DoorDash Inc. are said not to have participated. Flink and the investors did not want to comment when asked. A Rewe spokesman said the company was open to financing and a merger. Flink has raised $1.4 billion to date and was valued at approximately $2.85 billion at the end of 2021. According to experts, the startup was only valued at around one billion euros as part of the financing round in May 2023. At that time, Flink collected 150 million euros from its existing investors.
Is the next takeover already on the horizon?
Food delivery services experienced an extreme boom during the Corona pandemic. But a lot has changed: food delivery services are no longer the stock market darlings they once were. With central banks raising interest rates, capital is no longer available cheaply; high inflation and the war in Ukraine are dampening the economy. Startups valued at billions must rethink and adapt their aggressive expansion strategies. Demand is now falling and rising costs are making delivery services even more difficult. As part of the wave of consolidation that began, Getir swallowed up the German Flink competitor Gorillas at the end of 2022.
Apparently Getir is currently negotiating a takeover with Flink. According to information from “Manager Magazin”, the talks are well advanced. According to the report, a Flink spokesman confirmed that there is a financing offer for the delivery service as well as “several attractive purchase offers from delivery services”. The Flink brand is much better known than Getir. Its market share is estimated at more than 80 percent. However, Getir still has a crucial ace up its sleeve: the Mubadala sovereign wealth fund has invested $800 million in Getir, around eight times as much as in Flink. A merger is also in the interest of the investor from Abu Dhabi.
High costs with comparatively little profit
There is great cut-throat competition in the industry. Many experts assume that a wave of consolidation will roll in in the medium term. According to Alvarez & Marsal, the large number of current providers will not be able to survive. But analyst Genelot is sure that fast delivery services will remain with us. During the Corona crisis, customers liked having goods delivered as quickly and easily as possible.
The quick commerce business is considered controversial overall. According to analysts, a base generates profit from 500 to 1,000 orders per day. Skeptics primarily complain about high costs and comparatively little profit. For example, the startups have to pay high rents for their centrally located department stores. However, couriers can only deliver the goods to customers in a short time through particularly attractive locations.