Investors in Milkrun hunt for a buyer as the last local grocery delivery man struggles for new money

Fast delivery service Milkrun tried to raise extra cash twice in 2022 despite starting the year with $75 million from Tiger Global in a Series A last January, but failed to attract investors amid the financial failure of its rivals .

The Australian reports that the Sydney startup offered its Series B pitch deck to potential backers, claiming it would have total sales of $7 billion by 2026, capturing 20% of the country’s market share in the grocery, meal kit and alcohol sectors . Milkrun also hopes to capture 5% of pet, baby, gift and pharmacy sales.

To put that figure in perspective, Australia’s fourth-largest supermarket chain, IGA, founded in 1988, generates approximately $14 billion in annual revenue with more than 1,400 stores. Milkrun currently operates in Sydney and Melbourne.

Koala co-founder Dany Milham launched Milkrun in Sydney in September 2021 as a 10-minute delivery service, having raised A$11 million in June of that year.

Early backers included local VC Airtree, as well as Skip Capital and Grok Ventures – the family investment vehicles of Atlassian billionaires Scott Farquhar and Mike Cannon-Brookes.

According to The Australian, Milkrun’s investors, including Airtree, are now looking for a buyer or strategic partner for the company. But it’s hard to see how Milkrun is currently worth more than the $86 million venture capital firms already poured into it as the delivery service continues to lose about $10 on every sale and burn money like its now-defunct local rivals. , Send and Voly .

Limit losses

In June last year, as it prepared to hunt for more cash, just five months after making $75 million and 10 months after its first delivery, Milkrun began to scale back its operations, cutting overtime and temporary staff, in the hope that selling alcohol would increase margins and increase sales. around sustained losses.

Pitch documents at the time revealed that the company generated about $4 million in monthly revenue and hoped to double that to an annual run rate of $100 million by the end of 2022. But the pitch, drafted in April, lost the company $13 per order.

That pitch saw Milkrun generate more revenue per customer than Amazon’s US retail and expand into areas such as insurance and takeaway, predicting that the average order value in Sydney’s eastern suburbs will rise from $28.35 to $28.35 in 15 months. $41.72 in June 2023, with alcohol in the mix. Ten months ago it was at $34.

Milham said in June that the loss was cut to $10 and thought they’d be doing $1 per order in a few months. to international colleagues”.

“This is in no way a bad thing for our business at this stage and the fact that it was $40 and as high as $13 two months ago shows that we are meeting our goals and scaling as planned,” said Milham.

But amid Milkrun’s drive to boost profitability, rival Send collapsed in May 2022 after failing to find investor support in hopes of raising $15 million at a $50 million valuation.

Then Voly collapsed in November after also failing to raise additional capital. It launched in July 2021 and raised $18 million in a Seed round led by Sequoia Capital India alongside Global Founders Capital and Australia-based Artesian Capital in December 2020.

The company’s administrators said Voly “may have acted insolvent from the start” in their analysis of the company.

Voly had a net loss of $13.6 million for the fiscal year ended June 30, 2022.

Subscription butcher startup Onze Koe took over the Voly brand and other assets from the administrators just before Christmas.

Administrators Hall Chadwick believe creditors, who owe a total of $17.7 million, will receive between 15 cents and 27 cents in the $1 post-liquidation of Voly.

Startup Daily has solicited comment from Dany Milham and AirTree on Milkrun and will update this story if we hear from them.

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Australiabusinessblog.com