According to financial circles, the delivery service is negotiating with financiers about a capital injection.
(Photo: mauritius images / Norbert Neetz / imageBROKER)
Frankfurt, Berlin According to financial circles, the fast delivery service Flink is negotiating a cash injection. The Berlin company, which competes with Gorillas and Getir, wants to raise new capital in the hundreds of millions. The new round of financing could see the company’s valuation drop significantly, several people familiar with the matter said.
It is under discussion that Flink will collect 200 million euros. The talks are still in the early stages. Flink last raised money in December 2021 and was then valued at just under three billion dollars, including the 750 million raised. At that time, the largest US delivery service Doordash came on board.
Since then, however, a lot has changed. In view of rising interest rates and the ongoing economic weakness, venture capitalists are much more cautious than they were in the Corona boom years up to the end of 2021. Start-ups now have to show earlier that they can work profitably.
This poses challenges, especially in the low-margin food delivery business. So far, Flink and other young companies have been making losses with their business. The insiders say that it is unlikely that Flink could manage to keep the company value stable in this market environment and thus avoid a so-called down-round.
The devaluations are not popular. This is often accompanied by a loss of image for the start-ups, and the venture capitalists have to write off the holdings accordingly in such cases. In order to avoid this, they often have special rights granted in the event that a company is sold or goes public – so-called liquidation preferences.
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In the current talks about Flink, on the other hand, there is a devaluation in the room. So far, there have already been commitments of around 50 million euros from existing investors such as the grocer Rewe, as well as a further 50 million from new investors, it said.
The final valuation will depend on the offers from investors and is subject to change. The new amount of money should be such that Flink can get by with it until the company is profitable or can obtain capital through the stock exchange, it said. Flink and Rewe declined to comment.
Flink became a unicorn faster than many other start-ups
The industry of fast delivery services, known in technical jargon as Quick Commerce, gained in importance during the corona pandemic with billions of euros in venture capital. The start-up Flink, known for its pink backpacks and advertising posters, and its rival Gorillas were among the few European start-ups that were able to achieve unicorn status just months after they were founded, i.e. were valued by investors at more than one billion dollars.
The business model of Flink and its competitors consists of bringing groceries to the front door by bicycle courier in the shortest possible time. So far, none of the providers has shown that you can be profitable with it. With many fast delivery services in large cities, the shopping carts are just 20 euros – too little to earn money with it.
After the delivery boom in the corona crisis, the providers are now being hit by the increased food prices and the economic crisis. Added to this are the high logistics and personnel costs, which can hardly be changed. In addition, the competitive pressure is intensifying: Established supermarkets such as Rewe and Tegut have announced that they will significantly expand their range.
In Austria, Flink has already pulled the ripcord and filed for bankruptcy for the subsidiary there. Flink is currently still active in the Netherlands, France and the home market.
Gorillas had to agree to an emergency sale to competitor Getir in December. According to financial circles, the value of the merged company was halved to seven billion dollars.
>> Read also: Getir from Turkey buys Berlin delivery service Gorillas
The merged company is still hoping to raise fresh money from investor Mubadala, the Abu Dhabi sovereign wealth fund. Mubadala also has a stake in Flink. Many industry experts estimate that Flink will merge into Getir/Gorillas in the longer term.
A merger of Flink and Getir/Gorillas is currently not an issue, according to investor circles. However, it is possible that Mubadala will participate in the new Flink financing round. The fund declined to comment.
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