German food delivery giant Delivery Hero leads $1 billion investment in grocery start-up Gorillas
- Delivery Hero has invested $235 million in Gorillas as part of a $1 billion funding round.
- Gorillas was founded in May 2020 but has grown at a rapid clip during the coronavirus pandemic.
- The online grocery delivery firm is now valued at $3.1 billion following the cash injection.
LONDON — German food delivery firm Delivery Hero has invested $235 million in Gorillas, an online grocery start-up, as part of a $1 billion funding round.
Gorillas was founded in May 2020 but has grown at a rapid clip as demand for its service, which ships groceries to people's doors in as little as 10 minutes, took off during the coronavirus pandemic.
It's one of several European start-ups competing in an increasingly crowded space. Rivals include Turkish company Getir, British firm Zapp and German peer Flink.
Delivery Hero says it led Gorillas' latest funding round and now holds an 8% stake in the company. Tencent, Coatue, DST and Dragoneer also invested.
Delivery Hero is one of Europe's biggest online food delivery platforms, competing with the likes of Deliveroo and Just Eat Takeaway.com. It has ambitions of its own to succeed in rapid grocery delivery, having opened several delivery-only "dark stores" in various countries.
Gorillas is now valued at $3.1 billion following the cash injection, a significant step down from the $6 billion market value the firm had reportedly been seeking earlier this year.
The company was also in discussions with American food delivery giant DoorDash on an investment but those talks ultimately fell apart, according to various reports.
Gorillas declined to comment on the reports when asked about them by CNBC.
"Delivery Hero is on a mission to advance quick commerce globally and we see Gorillas as one of the leaders in Europe and the US," Niklas Östberg, Delivery Hero's CEO and founder, said in a statement Tuesday.
"The Gorillas team has an exceptional customer focus driving the highest retention rates we have seen in the industry."
Shares of Delivery Hero were up more than 1% Tuesday morning.
Gorillas says it now has a run rate of $300 million, meaning it expects to make that much revenue on an annual basis. For a company that's still only a little over a year old, that's no mean feat.
Still, whether Gorillas can keep up its wild growth as Covid-19 restrictions are rolled back remains to be seen. Meanwhile, the company has also faced anger from delivery couriers protesting unfavorable working conditions.