Venture Capital Funded Startup Deliveroo Exits German Market

Today, 12 August, UK food delivery app Deliveroo announced to pull out from Germany on 16 August. It currently collaborates with 2000 restaurants and more than 1100 self – employed delivery riders, havin 100 employees in the country.

The venture capital funded Deliveroo entered the German market four years ago facing fierce competition such as the Dutch

The London-based company did not state a specific reason for its withdrawal, although it is specified they do not rule out coming back to Germany in the future. For the time being, their efforts focus to grow operations in other markets, in Europe and Asia, without pointing out clearly where it wants to focus.

This decision comes after a year ago Deliveroo pulled back from several smaller German cities. At that time, it communicated its intentions to concentrate all its resources on large cities such as Berlin, Munich, Frankfurt, Hamburg.

Although the decision is definitive for the time being, the spokesperson stated Deliveroo does not rule out returning to Germany in the future.

The Amazon-backed startup capital firm announced its decision in a context where its rival, Delivery Hero, was bought by the giant Takeaway at the end of last year.  At the same time, Takeaway recently announced its agreement with Just Eat to combine their businesses.

On a brief and sharp analysis, Deliveroo faced some of the problems every venture capital funded startup needs to think and plan through:

  • competition existing on the market and the number of potential customers
  • focusing its efforts to be the leader on a local plan versus expanding globally
  • being able to have an unique selling point to distinguish itself clearly from the competition (other than the price)

Not only thorough planning ensures the succes of a venture capital funded company, but also choosing wisely its investor (taking into considerations predictable factors). In this case,  earlier in 2019, Amazon invested $575m in Deliveroo. Recently, Amazon closed its food delivery operations as UK’s competition regulator asked Amazon to pause all procedures to merge its operations with Deliveroo while it inspects the investment.

One thing is for sure. With Deliveroo quitting Germany, Takeaway’s position is highly consolidated. It has already communicated that over the 12 months ended June 30 its sales increased by 67% compared to the previous year. By the same date, Takeaway and Delivery Hero did €1.4 billion in sales. According to Takeaway the German market for food delivery is at €6.8 billion.