You are currently viewing Berlin’s Gorillas lays off 300, explores ‘strategic options’ in 4 countries as funds dry up for its $3B instant grocery play – TechCrunch

Berlin’s Gorillas lays off 300, explores ‘strategic options’ in 4 countries as funds dry up for its $3B instant grocery play – TechCrunch


It’s crunch time in the world of instant grocery delivery, with the latest turn representing a big blow specifically in Europe. Berlin-based Gorillas, which raised nearly $1 billion dollars at around a $3 billion post-money valuation only seven months ago — today announced that it would be laying off some 300 employees and exit four markets — Italy, Spain, Denmark and Belgium — as it seeks to shift from “hyper growth” (read: burning tons of cash to win new customers and expand its operations) to “a clear path to profitability.” Going forward, it will focus instead on its home market of Germany, as well as France, the Netherlands, the UK and the US, which it says collectively account for 90% of its revenues currently.

The announcement came on the heels of a report in the German press last night about the layoffs. The cuts will be mainly of staff in its Berlin HQ and represent about half of Gorillas’ employees, many of whom would have only joined in the last six months (and therefore still on ‘probation’ and so easier to made redundant under German labor laws).

Gorillas, according to a presentation it made to investors in March that has been shared with us, has around 700,000 active customers.

The news comes on the heels also of rumors we’d been hearing that the company had been raising more funds. But, given the state of the venture market at the moment — trickling down from the massive drops in the public markets, investors are reigning in their activities, and startups are finding it harder to close rounds — Gorillas was struggling to close its own new funding in recent weeks.

One source told us that it was estimated that in recent weeks the company had about $300 million left in the bank, but it has run into trouble because it has significant outstanding debts owed to suppliers and others, and it has been (prior to the cuts announced today) operating on a monthly burn rate of between $50 million and $75 million/month.

We have contacted Gorillas for comment on this and will update this story when we hear back.

The tech world — from publicly-traded companies down through to much younger startups — has been reeling from a huge drop in technology finance, which has been playing out in the form of market caps getting slashed; startups struggling to close rounds; and companies enacting hiring freezes and layoffs and cutting costs in other ways to conserve cash as they miss revenue targets.

But those who have been looking at the instant grocery market for a while will know that it was long seen as over-inflated and due a correction. There has been too much money swimming around too many startups, with founders and investors all looking to ride what seemed like a wave of opportunity for fast delivery on the back of changing consumer habits during Covid-19. While some companies have fallen by the wayside, others have been gobbled up, and a smaller group has continued to raise money (for example Zapp closed $200 million in January; Flink just last week announced more funding amid its purchase of Cajoo in France; Gopuff apparently is in the process of closing a big $1 billion round).

Gorillas’ news today spells out a couple of different challenges both for it, and for the wider instant delivery space.

First, on the part of Gorillas, the question will be whether it will shape up to be one of the last ones standing (and whether these moves will help it get there), or if it too will find itself on the bargaining table.

Gorillas has been one of the consolidators, buying companies like Frichti in France; but we’ve heard that it has also talked to buyers itself. One big candidate, sources tell us, has been Delivery Hero, which led Gorillas’ big $1 billion financing in October; but it has its own profitability issues to contend with before bringing on yet another a loss-making investment. Apparently others have also looked. (It’s not clear who else but other big players in the market include Getir, Gopuff, Flink.)

Gorillas hasn’t particularly helped its case: in the investor presentation that it made in March, it talked not just about its current market opportunity, but future plans to move into a pretty ambitious range of new areas like wearable health tech to help people make better life choices. “An AI app telling you what to buy and what not to buy and what is healthy or not,” one source told us with a laugh, comparing it to the lofty goals WeWork (later The We Company) once set out before it crashed.

Second, more generally in the market, Gorillas’ shift will definitely send already-wary investors into a new level of anxiousness about the state of this market.

“We believe instant grocery is profitable in the long term, but this sheds a bad light on it, and raises more questions around the business model,” one person from another fast-delivery platform told me. “Now even more people will look at this like it’s just a bubble.”

The big challenge for players in this space has always been how to differentiate themselves from the rest of the pack, since at the end of the day they are all promising the same things — a mix of essentials and sundries — and to consumers largely all look the same — you order with an app, and you get your goods in an hour or often less.

Now, the added challenge to that will be how to convince investors that they are approaching this in a better and more profitable way than the rest of the field.

“While this was an extremely hard decision to make, these are necessary moves that will help Gorillas to become a stronger and more profitable business with a sharpened focus on its customers and its brand,” Gorillas said in its statement. “With our current investments we are strengthening our position both financially and strategically for the future. We are extremely proud and grateful for what our teams have achieved over the last two years and we will do everything we can to support our employees in this transitional phase.”



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