GrubMarket acquired Good Eggs

More and more consolidation is going on in the web food delivery world, TechCrunch has learned and confirmed that GrubMarket — a startup supported by Tiger Global, amongst others, which has quietly built a B2B empire within the logistics of agricultural and food products — has taken over Good Eggsa once-lauded fresh food delivery startup that recently bumped into financial trouble.

The terms of the deal weren’t disclosed, but sources near the deal say it was a stock deal at a valuation barely higher than Good Eggs’ last valuation of $22 million. Investors proactively turned to GrubMarket on the lookout for an exit for Good Eggs.

We may confirm that Good Eggs will probably be led by a brand new leader under GrubMarket. Keith Brewer, who was COO of GrubMarket’s Daylight Foods, will lead Good Eggs. While many Good Eggs employees are expected to maneuver to GrubMarket, it’s not yet clear whether Rodrigo Arevalo, the Uber alum who’s currently listed as CEO of Good Eggs, will remain with the corporate as a part of it.

It’s a reasonably significant turnaround for Good Eggs, and one other sign that investors who’ve sunk lots of of thousands and thousands of dollars into startups which have consistently lost money are actually trying to put an end to their activities and move on.

For comparison, in November 2020, Good Eggs was price $365 million. PitchBook Data (round announced in 2021), with a vaunted investor roster that included Benchmark, Index, Sequoia, and Thrive, amongst many others. However, after COVID-19, it hit rocks and recently the value has been lowered as much as 94% last yr, giving a valuation of $22 million.

GrubMarket, meanwhile, is currently valued at about $3.5 billion and has raised greater than $560 million in funding. The company has long had its eye on an IPO, although the general public markets are still incredibly volatile for tech stocks and the IPO window is barely open for a fraction of a second. Mike Xu, GrubMarket’s founder and CEO, declined to comment on the matter when interviewed for this text. (There’s a probability that more funding will probably be announced, too: GrubMarket’s $3.5 billion valuation was reported by CNBC earlier this yr; PitchBook’s latest valuation of $2.2 billion comes from 2022.)

GrubMarket was initially a competitor after which a supplier to Good Eggs. The changing nature of that relationship could make clear why some corporations achieve grocery logistics and delivery while others fail.

Both Good Eggs and GrubMarket launched in 2011 and 2014, respectively, with a B2C focus, specifically providing boxes of fresh food to consumers and businesses. However, in a while, as Good Eggs shifted its focus to the patron, GrubMarket shifted to a B2B focus and quickly expanded, working with each smaller and bigger grocers.

Whole Foods is its largest client, though it supplies groceries and more to other major corporations like Walmart, in addition to other big brands like Stanford University and, lately, Good Eggs. With a reasonably tough eye on margins, unit economics, KPIs, and long-standing supplier relationships — and I’d add a reasonably intense work ethic, judging by its founder’s lack of sleep — GrubMarket is profitable and has been for a while.

“Profitability is in our DNA,” Xu said. “We know how to make things profitable. It’s a systematic approach.”

Xu added that his company stays focused on B2B—it has made greater than 80 acquisitions, most of which were geared toward strengthening that business—although acquisitions like Good Eggs underscore the way it could use economies of scale to revisit B2C. Still, Xu described the deal as “optimistic” somewhat than opportunistic.

Grocery delivery and food startups typically have seen their share of ups and downs, with some categories taking a very hard hit. Getir, a serious player in “instant” grocery delivery that aggressively raised lots of of thousands and thousands of dollars (from a number of the same backers as Good Eggs, it seems), earlier this yr cut its losses and retreated to its home market of Turkey. Others have struggled to grow at high valuations, while just a few, like GrubMarket, are playing consolidator roles to enhance their cost structures. Publicly traded Instacart is ready to report earnings today, which could possibly be an indicator of how others will fare.