The web meals and grocery supply house is seeing extra consolidation. TechCrunch has discovered and confirmed that GrubMarket, the startup that has quietly constructed a B2B empire in produce and grocery logistics and is now valued at $3.5 billion, has acquired Good Eggs, a once-feted contemporary meals supply startup that has fallen on arduous instances lately.
The monetary phrases of the deal aren’t being disclosed, however sources with information of the deal advised TechCrunch that it was an all-stock transaction that valued Good Eggs barely greater than its earlier valuation of $22 million. The sources additionally mentioned Good Eggs’ traders proactively approached GrubMarket on the lookout for an exit.
TechCrunch has additionally confirmed that Good Eggs can be run by a brand new chief beneath GrubMarket: Keith Brewer, who was the COO of GrubMarket-owned Daylight Meals, will head Good Eggs. Whereas various Good Eggs’ employees are anticipated to return over to GrubMarket, it’s not but clear whether or not Rodrigo Arevalo, the Uber alum who’s at present listed as Good Eggs’ CEO, can be staying on.
This can be a fairly main flip for Good Eggs, and it serves as yet one more sign of how traders, who pumped a whole lot of thousands and thousands of {dollars} into perpetually loss-making startups, at the moment are wanting to attract a line beneath these actions and transfer on.
Good Eggs, for context, was valued as excessive as $365 million in November 2020, per PitchBook information (a spherical it introduced in 2021), and had a vaunted investor listing that included Benchmark, Index, Sequoia and Thrive, amongst many others. However because the COVID-19 tailwinds pale, it hit the rocks, and was ultimately marked down a whopping 94% final yr, touchdown it at that $22 million valuation.
GrubMarket, in the meantime, is now valued at round $3.5 billion and has raised over $560 million in funding from numerous backers that embody Tiger International. Its $3.5 billion valuation was reported by CNBC earlier this yr.
GrubMarket initially competed with Good Eggs, however ultimately began supplying the startup. The altering nature of that relationship could effectively present a window into why some firms succeed within the grocery logistics and supply house and a few don’t.
Each Good Eggs and GrubMarket launched, respectively in 2011 and 2014, with a give attention to B2C, particularly delivering bins of contemporary meals to customers and companies. However later, as Good Eggs saved its eyes on customers, GrubMarket pivoted to concentrating on the B2B alternative, and it scaled quick to work each with smaller grocers in addition to main ones.
Entire Meals is GrubMarket’s largest buyer. It additionally provides groceries and different gadgets to main malls like Walmart, in addition to to different huge names like Stanford College. With a reasonably relentless eye on margins, unit economics, KPIs and lengthy relationships with suppliers, GrubMarket has been worthwhile for a while.
“Profitability is in our DNA,” GrubMarket CEO and founder Mike Xu mentioned. “We all know easy methods to get issues worthwhile. It’s a scientific strategy.”
Xu added that the corporate’s focus stays on B2B — it has made greater than 80 acquisitions, most of which bolster that enterprise — however acquisitions like Good Eggs underscore the way it may use its economies of scale to revisit B2C. Nonetheless, Xu described the deal as “optimistic” reasonably than opportunistic.
Grocery and meals supply startups have confronted a number of ups and downs, and a few classes have been hit fairly arduous. Getir, a serious participant in “instantaneous” grocery supply that aggressively raised a whole lot of thousands and thousands of {dollars} (from among the similar backers as Good Eggs, because it occurs), earlier this yr lower its losses and retreated to its house market of Turkey. Different startups are struggling to lift at sturdy valuations whereas a couple of like GrubMarket are taking part in consolidator to enhance their price constructions. U.S.-based Instacart is because of announce its second-quarter outcomes as we speak, which may show a bellwether for different firms within the house.
