Grocery Delivery Startup Oda Secures €223 Million Funding

European food delivery companies, particularly those specializing in grocery services, are continuing to attract substantial investment. This trend is driven by a significant consumer shift towards online shopping, accelerated by the conditions of the past year.

Based in Oslo, Kolonial is a startup offering same-day or next-day delivery of groceries, meal kits, and household necessities. The company aims to replicate the experience of a complete weekly supermarket shop, while maintaining competitive pricing.

Rebranding and Expansion Plans

Kolonial has successfully secured €223 million ($265 million) in a new equity funding round. Notably, the company has achieved profitability this year.

Alongside the funding, Kolonial is undergoing a rebranding to Oda. These funds will be strategically allocated to expand operations into new markets, beginning with Finland and subsequently Germany in 2022.

Valuation and Market Positioning

CEO and co-founder Karl Munthe-Kaas revealed to TechCrunch that this funding round values Oda at €750 million ($900 million) post-money.

The online grocery delivery sector is becoming increasingly competitive, with significant investor interest fueling the growth of numerous startups. Each company adopts a unique approach and originates from diverse geographical locations.

Oda believes its specific combination of factors will position it as a leader in this evolving market.

A Focus on Affordability and Profitability

“Our service is designed for the mass market, offering both rapid deliveries and affordable prices,” Munthe-Kaas explained to TechCrunch. “To truly capture the entire family grocery budget, a premium service model is not viable. We have successfully implemented this strategy and are now profitable.”

The company is now poised for its next phase of growth, backed by prominent e-commerce investors.

Investment Details

The funding round is co-led by SoftBank’s Vision Fund 2 and Prosus, the technology investment arm of Naspers. Existing investors Kinnevik and REMA, a Norwegian “soft discount” supermarket chain, are also participating in this round.

This investment represents a significant increase for Oda, with the brand officially transitioning to its new name at the end of the current month.

Growth Trajectory

According to PitchBook data, Oda had previously raised approximately $96 million. Its last valuation, estimated in 2017, stood at just $178 million.

A Consolidated Grocery Experience: 50 Supermarkets in a Single Venue

The company’s evolution has been remarkable. Established in 2013 by a group of ten friends, Kolonial initially envisioned a smaller scope. The Norwegian term "Kolonial" translates to "cornershop," a connotation the founders, including Munthe-Kaas, deliberately sought to avoid, prompting a name change.

Currently, Oda is primarily focused on challenging established supermarkets, boasting an average order value of $120, while maintaining a notably streamlined cost structure.

Recent circumstances have undoubtedly contributed to its success.

The online grocery sector had already been experiencing growth and maturation, but the past year acted as a significant catalyst. The COVID-19 pandemic, stay-at-home directives, and a widespread preference for social distancing encouraged numerous consumers to try online grocery shopping for the first time, with many continuing to utilize the service.

“The grocery market has experienced a substantial turning point over the last year, with a clear shift towards online channels, accelerated by COVID-19,” stated Larry Illg, CEO of Prosus Food. “Oda’s leadership and impressive expansion in Norway, combined with its innovative technology and ambition for European and global reach, make it an ideal partner to capitalize on the evolving grocery landscape.”

Over the past eight years, Oda has risen to become the leading player in a sector it largely helped to define within its domestic market. Achieving profitability in 2020 with revenues of €200 million, the company now commands approximately 70% of Norway’s online grocery ordering and delivery market, based on its unique operational approach.

This approach centers on Oda constructing and managing its own complete supply chains, directly connecting producers with consumers—without relying on partnerships with existing brick-and-mortar retailers. Furthermore, Oda produces several products in-house, such as baked goods, on demand, and utilizes centralized fulfillment centers to efficiently serve extensive geographic areas.

“Centralized warehouses effectively consolidate the output of 50 supermarkets into a single location,” explained Munthe-Kaas, adding that this also enhances the business’s environmental sustainability.

These fulfillment centers operate with “exceptional efficiency,” according to Munthe-Kaas.

Oda’s grocery item picking rate averages 212 units per hour—calculated by dividing the total items picked for orders weekly by the total labor hours worked. Munthe-Kaas noted that Ocado in the U.K. achieves the next highest rate at 170 UPH, while the industry average is around 100 UPH, with traditional in-store picking averaging 70 UPH.

This efficiency translates into significantly lower operational costs, including improved ordering and inventory management, ultimately boosting Oda’s overall sales margins.

Munthe-Kaas refrained from detailing the specifics of how Oda achieves such high UPH numbers, citing competitive sensitivity, but emphasized the extensive use of automation and data analytics in the process.

This news is particularly encouraging for SoftBank, which has faced challenges in the e-commerce sector in recent years, having invested in several promising companies that struggled with sustainable unit economics.

“Oda’s strong position in Norway demonstrates the value of its customized and data-driven strategy in delivering a personalized, comprehensive, and reliable online grocery experience,” said Munish Varma, managing partner for SoftBank Investment Advisers. “We are confident that Oda’s customer-focused approach, leading-edge automation technology, and fulfillment efficiency will drive success as it expands internationally, benefiting both customers and suppliers.”

The primary challenge for Oda moving forward will be replicating its successful business model in new markets.

Oda will be seeking customer adoption in new territories while potentially facing intense competition from other companies also pursuing international expansion.

Several other online supermarket ventures exist, including Rohlik from the Czech Republic (which secured $230 million in funding in March); Everli from Italy (formerly Supermercato24, raising $100 million); Picnic from the Netherlands (anticipating further funding given its stated international ambitions); and Ocado in the U.K. (which has secured substantial investment for its global expansion).

Additionally, a new wave of companies is adopting more agile approaches with smaller inventories and faster delivery times, aiming to cater to both individual consumers and evolving shopping habits—smaller, more frequent purchases, even for families.

Among these “q-commerce” (quick commerce) players, recent funding rounds include Glovo’s $528 million raise; Gorillas in Berlin securing $290 million; Turkey’s Getir—also expanding rapidly across Europe—receiving $300 million at a $2.6 billion valuation with Sequoia’s first investment in the European food market; and Zapp in London reportedly closing $100 million in funding.

Deliveroo, which recently went public, is also offering grocery delivery (in partnership with Sainsbury’s) alongside its restaurant delivery service.

Interestingly, these companies are more akin to modern cornershops than Oda itself, and Munthe-Kaas views them as “complementary” to Oda’s offerings.

Munthe-Kaas remains steadfast in his commitment to the core principles that have guided Oda for years.

“To succeed, you must surpass physical stores in terms of quality, selection, and price, and provide convenient home delivery,” he stated. “This is a margin-driven business, and relentless optimization is the key.”

However, he acknowledges that this approach may require adjustments depending on the specific market.

For instance, while Oda has not collaborated with other retailers in Norway—even the REMA investment is focused on achieving economies of scale in product procurement for independent sales—this could be a viable strategy in other markets.

“We are currently in discussions with several retailers, wholesalers, and producers,” he said. “Securing favorable sourcing terms and establishing efficient upstream logistics are crucial, and there are various ways to achieve this. We are open to forming partnerships in this area, but we still believe that controlling the value chain is the path to victory.”