Rohlik rolls up $170M to expand in European grocery delivery and sell its tech to others

The salad days of fresh grocery delivery startups are over, but those that have stayed the course, and built businesses that are seeing gains, are still here and hungry for more growth. On Friday, one of those survivors, the Czech grocery delivery company Rohlik, announced $170 million in new funding.

Rohlik — which means “baker” in Czech (and also a little roll the baker might make) — has aimed to carve out a differentiated position. Its focus has been on operating smaller warehouses and linking up ties with local producers and sellers, such as butchers and fishmongers, rather than reproducing what a large supermarket might sell online (or indeed stock in a physical store). In reference to the Rohlik of its name, it bakes bread at its distribution centers.

“To replace Rohlik, you would have to do five different shops,” Tomáš Čupr, the CEO and founder of Rohlik, told TechCrunch in an interview. Some 17,000 SKUs are on offer via the service, with delivery slots of 1 to 2 hours from ordering.

Rohlik said it served 800,000 customers in 2023. Now the plan is to use the fresh funding to expand its model in Europe — with a target of launching in 10 more cities in the next six years.

Alongside service expansion, it wants to turn up the gas on its tech, which includes logistics and analytics software, as well as robotics for sorting and picking — by licensing it to other delivery players to build out their own local networks and delivery operations modeled on what Rohlik has built. Čupr said it will launch its tech platform licensing initiative later this year.

The European Bank for Reconstruction and Development (EBRD) is the lead investor in Rohlik’s latest round, with previous backers Sofina, Index Ventures, Quadrille, and TCF Capital also participating, as well as the European Investment Bank (EIB) under its Scale-Up Initiative. The EIB portion is debt, per Čupr, who described it as a “minority” of the full amount.

Čupr declined to give a valuation for the round, but from what we understand it is higher than previous valuations but less than $2 billion. For some context, the last large round of funding that Rohlik raised was in 2022, and that came in at what we now know to be around the $1.3 billion valuation mark pre-money. The total amount the startup has raised in equity and debt is now approaching $800 million.

This latest funding injection is coming at a tough time in the grocery delivery business. The peak of the COVID-19 pandemic saw a couple of years of major attention, funding, and usage of delivery services — which led to hundreds of millions of dollars of funding being funneled into different permutations of the business model, especially those that looked particularly novel (such as “instant” delivery startups). In 2021 alone, there was nearly $19 billion in investments in grocery delivery startups according to the investment firm AgFunder. 

Perhaps inevitably, after the peak came the trough, with a number of delivery startups disappearing and/or being acquired for pennies on the dollar/pound/euro, combined with lots of layoffs, retrenchments and restructuring.

After years of aggressive funding and growth, the erstwhile major player Getir is now focusing on its home market of Turkey, for instance. While U.S. rival Gopuff reportedly burned through $400 million last year. And it’s not just the most obvious instant players that are buckling. Oda in Norway, a big grocery contender that also raised and acquired aggressively, has been laying off people in waves and shrinking its geographic footprint.

Even Ocado, seen by many as the gold standard in the grocery delivery world, has been struggling on weaker earnings and had partners pausing their Ocado-powered warehouse projects. 

Given all this turbulence, Rohlik is both feeling the pressure but also showing some signs of where it might build defenses as it watches closely what others do. “I know Ocado well,” he noted. “Our CFO is ex-Ocado.” 

Outside of the Czech Republic, the company — which Čupr describes as “20 years in the making” — has operations in Austria, Germany (where it operates as Knuspr, as illustrated above), Hungary and Romania. Its business units in its home market, in Hungary and in Munich are all now profitable. Rohlik said revenues have, on average, been growing 40% post-COVID-19.

The startup has set itself a target of reaching €1 billion in revenues and positive cash flow by the end of 2024. But it does not disclose what its revenues are right now, so we can’t say if Rohlik is biting off more than it can chew. 

“We first partnered with Rohlik three years ago and have been continuously impressed by the management team’s execution and investment into proprietary technology, automation and increasing use of artificial intelligence across its operations,” said Tamas Nagy, director, co-head of equity investments at the EBRD, in a statement. “We are very proud to support Rohlik’s growth and expansion plans in the years to come.”