Flink: German Grocery Delivery Startup Raises $240M

The Continued Rise of On-Demand Grocery Delivery

The surge in popularity of on-demand grocery delivery, significantly accelerated by the Covid-19 pandemic, continues to attract substantial investor interest. While the long-term consumer adoption of these services remains to be seen, the leading startups in this sector are currently securing significant funding.

Flink Secures $240 Million in Funding

Flink, a Berlin-based on-demand grocery service, has recently raised $240 million to facilitate expansion into new cities and countries. The company operates through a network of self-managed dark stores and offers a curated selection of approximately 2,400 items, promising delivery within 10 minutes.

Current Operations and Target Demographic

Currently, Flink is operational in 24 cities across Germany, France, and the Netherlands. The service primarily targets younger consumers, individuals with limited refrigerator space, those who have overlooked items during larger shopping trips, and those seeking a convenient alternative to traditional weekly grocery shopping.

CEO Statement on Growth and Service

“Our mission is to reclaim valuable time for individuals during their busy schedules and consistently deliver exceptional service with every order,” stated Oliver Merkel, CEO of Flink, who co-founded the company alongside Julian Dames and Christoph Cordes. “We aim to become the preferred destination for everyday essentials, offering competitive prices and instant delivery through our dedicated riders. The recent growth in orders has been remarkable, a direct result of the high-quality service we provide.”

Rapid Growth and Valuation

This $240 million Series A funding round is particularly noteworthy given the company’s recent launch in December of last year. While Flink has not publicly disclosed its valuation, sources close to the company indicate it has not yet reached “unicorn” status – a valuation of $1 billion.

Strategic Partnership with REWE

The funding round is co-led by Prosus, BOND, and Mubadala Capital, and includes a strategic partnership with REWE, a major German supermarket chain. This collaboration will position Flink as REWE’s preferred partner for smaller, immediate shopping needs, complementing REWE’s existing grocery delivery initiatives for larger orders. It is currently unclear whether REWE has made a direct investment.

Previous Funding Rounds

This investment follows a $52 million round secured in March, just three months after the company’s inception, from Target Global and earlier investors Northzone, Cherry Ventures, and TriplePoint Capital. Cristina Stenbeck from Kinnevik also participated in this round as a personal investor.

The Opportunity in Grocery Delivery

The current market presents a unique opportunity for new entrants in the food and, specifically, grocery delivery sector.

Increased Demand During Pandemic

The past year witnessed widespread shelter-in-place orders across Europe, leading to a significant increase in online food ordering as consumers sought convenient delivery options for essential goods. This resulted in a demonstrable surge in demand.

Challenges of a Crowded Market

However, this increased demand has also attracted a large number of companies vying for market share. The proliferation of competitors raises questions about the market’s long-term sustainability.

Competition in the Fast-Grocery Space

Flink faces competition from numerous players, including Gorillas, another Berlin-based startup that has also secured substantial funding and achieved a valuation exceeding $1 billion. Established startups like Glovo, Kolonial, Everli, and Rohlik, along with larger companies such as Ocado and traditional brick-and-mortar grocers, are also investing heavily in their own delivery operations.

Recent Funding Rounds by Competitors

Notably, Getir, a fast-grocery startup from Turkey, recently announced a $550 million funding round at a $7.5 billion valuation. This news may have influenced Flink’s decision to announce its own funding round today.

Market Sustainability and Consolidation

A key question remains whether the market can support such a large number of competitors, and what the implications will be for the companies and investments within this space.

Parallels to Restaurant Delivery

The current situation mirrors the early stages of the restaurant delivery market, where numerous regional players emerged before a wave of consolidation occurred, driven by the pursuit of economies of scale and ultimately leading to acquisitions by larger, well-capitalized companies.

Diversification into Grocery by Existing Players

Even established food delivery companies, such as Deliveroo, are expanding into the grocery sector to diversify their offerings.

Prosus’ Strategic Investment

The involvement of Prosus in this funding round is particularly noteworthy.

Prosus’ Past Acquisition Attempts

Prosus, a technology investment company spun out of Naspers, previously attempted to acquire Just Eat, a major food delivery platform, but was unsuccessful. Just Eat ultimately merged with Takeaway, leaving Prosus without a deal.

Prosus’ Current Investment Strategy

Since then, Prosus has actively deployed its capital, making investments in Swiggy in India, Kolonial, and now Flink, to establish a strong position in the food delivery market.

Prosus CEO on the Opportunity

“The potential for online grocery delivery is substantial, with the German grocery market alone projected to exceed €300 billion in the coming years,” stated Larry Illg, CEO of Food Delivery at Prosus. “The past year has seen a surge in new players entering this emerging market, all striving to meet growing consumer demand. Flink distinguishes itself by offering ultra-fast delivery, typically under 10 minutes, providing consumers with immediate access to the items they need. Flink’s innovative, technology-driven logistics, combined with the team’s expertise, the quality of their partnerships, and their rapid execution within Germany, have been truly impressive.”