We’ve been saying that investment in grocery startups is downright frothy this year, and now PitchBook has put a number to all this VC activity. CNBC reports that venture-backed grocery startups have raised $10 billion so far in 2021, according to PitchBook’s data, vaulting past the $7 billion raised in the sector last year.
Part of the reason for the big jump is the mega-rounds that some grocery startups around the world raised during the first half of this year:
- Xingsheng Youxuan (China) – $3 billion
- Gopuff (U.S.) – $1.5 billion
- Getir (Turkey) – $850 million
- Glovo (Spain) – $528 million
- Rohlik (Czech Republic) – $380 million
- Weee! (U.S.) – $315 million
- Flink (Germany) – $292 million
- Gorillas (Germany) – $290 million
- Instacart (U.S.) – $265 million (and has raised $2.7B in total)
And that doesn’t even count all the other, smaller fundraises that have happened for companies like Food Rocket and Fridge No More.
The pandemic certainly had a hand in driving all this frothiness. Lockdowns, social distancing and general fears around catching COVID-19 pushed record amounts of people into online grocery shopping in 2020. Additionally, there are a wave of startups like Gorillas, and Gopuff and Fridge No More that are creating an entirely new type of on-demand, speedy delivery model. These companies operate dark stores in neighborhoods with a small delivery radius, promising grocery delivery in as few as 10 minutes. This is a new concept for most shoppers, and the allure of tapping a few buttons on your phone and food arriving minutes later could upend the way we buy groceries.
CNBC adds that all of this massive funding is disproportionate to the opportunity in the online grocery category. As such, there could be a wave of consolidation coming soon. This is true whenever money floods a particular sector, and it is especially worth considering given the fluctuating state of the pandemic.
Questions around how much consumers will stick with online grocery shopping once the pandemic recedes remains unclear. Vaccines have helped abate the virus, but they are rolling out at different paces around the world, and viral variants threaten to bring resurgences in case numbers. Brick Meets Click reported that online grocery shopping dropped to $7 billion in sales this past May, down 16 percent year-over-year. But that $7 billion figure is still 3.5 times higher than pre-pandemic online grocery sales.
But none of what might happen can change what’s already been done. That $10 billion has been invested, now we’ll just see which companies can bring bring returns.
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