Blog

Instant grocery startups sprang up and grew like weeds during COVID-19, fueled by consumers opting to practice social distancing and ready to order their food and sundries at the tap of an app, and VCs seeing an gap in the delivery market that had yet to be definitively filled. Now, perhaps inevitably, comes the consolidation. In the latest development, Flink — one of the big instant delivery players out of Germany, backed by DoorDash in the U.S. — is acquiring Cajoo, a large instant delivery startup based in France. Alongside this, Flink is picking up a separate, fresh investment from one of Cajoo’s biggest investors, the supermarket giant Carrefour.

Cajoo will be rebranded as Flink by Q2 of this year; and according to Flink, the combined business will overtake Getir as France’s biggest instant grocery business in terms of reach and turnover, covering Paris and eight other cities with 30 hubs, altogether a potential footprint of 6 million customers. Cajoo currently has 400,000 customers in France.

Financial terms of the deal and the investment are not being disclosed officially, but sources close to the companies tell us that Flink paid between €90 million and €100 million for Cajoo, and that the Carrefour investment is around €60 million to €70 million. We’ve heard that the latter is an equity investment and values Flink at $5 billion (€4.8 billion) post-money — Flink is not providing a comment on that number (we asked).

“Cajoo has done an amazing job in leading the quick commerce revolution in France and building a loyal customer base,” said Oliver Merkel, co-founder of Flink, in a statement. “We are happy to join forces under the Flink brand to create the #1 player in quick commerce in France. At the same time, we feel privileged to enter an exclusive partnership with Carrefour to offer the best assortment at competitive prices to our customers.”

The $5 billion figure is a big hike on Flink’s most recent valuation — which was $2.85 billion when it raised $750 million in the round led by DoorDash in December 2021. That is a sign that for all the talk of the market cooling off for growth-stage startups, there remain some pockets where that is not the case. Part of the story here seems to be about investors consolidating around a smaller set of players, but also that the players themselves are proving their worth by way of numbers. Flink says it is currently operating at an ARR of $500 million and is growing revenues at double-digit percentages week-on-week at the moment, although it is not disclosing actual sales numbers.

As we have previously reported, Flink and Cajoo — itself is a very new company, one of the Covid babies in the space, launching only last year — have been in an M&A dance since last autumn, one of the many deals that have been swimming around the heady European market. (Others have connected include Gorillas buying Frichti in France; GoPuff buying Dija and Fancy; Getir buying Blok.) Initially, it was a negotiation that didn’t progress and instead led to Cajoo raising $40 million from Carrefour and others.

However, instant grocery — like other delivery businesses — is very capital-intensive and it looked like Cajoo might have either needed to raise again, or sell up. It may well have been very hard right now to do the former given the wider market conditions.

From what we understand, while there were others also interested in the startup, Flink came out on top in part because of synergies between the two companies: one of Flink’s big backers is also a supermarket chain, REWE, and both startups have built out sourcing and other functions leaning on their strategic backers’ scale.

“The Cajoo story has been amazing,” said Henri Capoul, CEO of Cajoo, in a statement said with apparently very little irony given the young age of the company. “I am very proud of the whole team, for the value we have created together over the past 15 months to our customers. We are happy to find such great partners with the Flink team with whom we share common values, a similar vision on how to drive customer satisfaction and build a loyal customer base for sustainable growth for years to come. I am very pleased to see how the French tech ecosystem is building great companies, appealing to the best EU companies as today’s news shows that we are getting acquired by the fastest growing company in the European market.”

For the big grocery chains, investing in smaller startups that are building out the technology and business case behind instant delivery is not a bad move: rather than trying to compete on unfamiliar footing, it means they can test out the waters for these new business models and in tapping new demographics and consumer habits with relatively little impact on / disruption of their current operations. And this is a small change for a giant like Carrefour, which operates 13,000 stores in 40 countries, with gross sales of €81.2 billion in 2021.

“Less than a year after joining forces with Cajoo, we are in position to take part in the market consolidation and forge a valuable strategic partnership with Flink. As a leader in home delivery in Europe, we are delighted to reinforce our e-commerce ambition and bring unprecedented value to Carrefour and Flink’ customers,” said Elodie Perthuisot, chief e-commerce, digital transformation and data officer at Carrefour.

Nevertheless, France — where grocery chains were relatively late to the delivery game too and where in-person shopping in outdoor markets remains a part of the country’s cultural fabric — is an interesting one watch when considering the long-term viability and traction of instant-delivery startups.

It will also be interesting to see how and if Flink comes to the U.K., one of the biggest markets in Europe where it has yet to establish any kind of foothold to date.