The Prague-based online grocery delivery Rohlik Group just hit unicorn status with a €100M Series C investment, led by Index Ventures. Previous investors Partech and Quadrille Capital also participated in the round. Going forward with its expansion plans, the company will use the funds to enter more European markets, starting with Germany, and to introduce more automation in its fulfillment center.
Founded by Tomas Cupr in 2014, Rohlik Group already serves more than 750 000 customers in the Czech Republic, Hungary, and Austria. And in 2020 alone, it reached a revenue of over €300M. This is its second closed funding round for this year, as only a couple of months ago, the company raised €190M.
It’s all about the business model
Jan Hammer, Partner at Index Ventures, points out that Rohlik has been experiencing continuous strong growth and its unique business model of combining convenience with a wide and high-quality product portfolio allows it to outperform across metrics. The biggest differentiating factor of the company is that, unlike other instant grocery delivery startups,, Rohlik functions as a virtual supermarket with over 17 000 items that can be delivered in less than 2 hours. Even though the startup adapts to the needs of the markets where it expands, it follows the same business model of combining own-purchased wholesale items, products from its big retail and wholesale partners, and items sourced from local businesses. This product mix allows Rohlik to personalize its offering for each market and respond to the local market demand and create economies of scale, using its logistics.
The goal of the Czech startup is not to follow the existing grocery delivery trend of amplifying the growth of large supermarkets at the expense of the survival of the small food merchants. Instead, Rohlik tries to enable local bakers, fishmongers, and all kinds of independent small businesses to start selling their products to a wider base of consumers.
Expansions by the playbook – the future of eBag?
Rohlik’s success is part of the trend of the booming of all the grocery delivery markets across Europe. During the past couple of months startups with such models have closed significant investment rounds. Now they are eyeing expansions into new markets and horizontal acquisitions of local competitors are often the preferred way to go. The German 10-minute grocery delivery Gorillas, which closed €245M in March 2021, has become the fastest-growing European tech company after reaching the $1B valuation 9 months after its launch.
A couple of thousand kilometers away, the Turkish Getir which has raised nearly $1B in the past four months, just announced its first acquisition of the Barcelona-based grocery delivery startup Blok with the aim to enter the Spanish and Italian markets.
Following a similar path, at the end of June 2020, Rohlik invested €500K in exchange for 4.96% in equity in the biggest Bulgarian digital grocery shop eBag, hinting at the possibility that there might be a full acquisition in the long term. This was the first international investment of the company and the founder and CEO of eBag Alexandrov has shared that during the negotiation process, the two companies discovered a potential for synergies. In March 2021, Rohlik invested another €500K in eBag and raised its equity to 7.63%, so we are yet to see how the synergy between the two companies will play out.
Another example of the ongoing trend of consolidation in the food delivery market in the Balkans, is Glovo’s acquisition of Delivery Hero’s operations in May this year for €170M. With this strategic move, the Spanish multi-category delivery startup took over foodpanda in Romania and Bulgaria, as well as Donesi in Serbia, Montenegro, Bosnia and Herzegovina, and Pauza in Croatia.
The next steps for the Czech delivery service
Rohlik plans to further expand geographically in Europe and enter the German market, by launching in Munich first. According to Cupr, the logic behind the expansion strategy is that Germany is the largest market in Europe, and it is surrounded by countries where the company already operates. In the future, Rohlik aims to start providing its services to Romania, Italy, Spain, and France as well. When it comes to short-term goals, the grocery delivery company plans to invest in R&D, building on the automation capacities of its fulfillment center and expanding its team.