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Investors are losing their appetite for food delivery startups

May 19, 2016, 16:18 IST

Take Eat Easy

The amount of money being invested into food delivery startups declined rapidly in the first quarter of 2016, according to research from venture capital analysis firm CB Insights.

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Grocery and restaurant delivery companies raised $609 million (£416 million) in the first quarter of the year, down from $2 billion (£1.4 billion) for the final quarter of 2015.

CB Insights' data shows that food delivery startups are set to raise half as much money in 2016 as they did in 2015.

In 2015, $5.4 billion (£3.7 billion) was raised by some 259 food delivery startups, up from 58 in 2012.

London's Deliveroo raised a $100 million (£68 million) funding round in November 2015, while Berlin's Delivery Hero raised $110 million (£75 million) in June 2015.

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The most well-funded food delivery startup to date hails from China, with Shanghai-based ele.com raising $2.3 billion (£1.6 billion) from investors at Silicon Valley fund Sequoia, Chinese tech giant, Alibaba, and many others.

CB Insights

"US-based companies have attracted 45% of food delivery deals since 2012, followed by India with 18%, China with 10%, and Germany with 6%," wrote CB Insights on its blog.

"However, the dollar breakdown looks rather different. China and Germany capture a disproportionately large share of food delivery dollars, while the US, India, and the UK get squeezed.

"China's five mega-rounds since 2012 (three to Ele.me and two to Womai) contribute to the nation's 41% share of food delivery dollars over the five-year period, even as it took just 10% of deals. Germany has racked up six $100 million+ mega-rounds: three to Delivery Hero, one to HelloFresh, and two to FoodPanda.

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"Of Germany's food delivery mega-rounds, investor Rocket Internet participated in four."

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