Investors have big plans for Wolt. The Finnish food delivery startup, which has become a major European player and recently expanded into retail and groceries, took home $530 million in a new funding round this week. Following a $122 million round in May, the figure brings them up to $856 million total raised, led by Iconiq Capital, which manages money for Silicon Valley elite including Jack Dorsey and Mark Zuckerberg. Wolt hasn’t released a valuation but CEO Miki Kuusi tells TechCrunch that the six-year-old firm has hit unicorn status. Wolt will complete preparations for an IPO this year, planning for a 2022 stock market debut. 

With cash in its pocket, the company is free to focus on growth over profitability. In 2020, the company tripled revenue to $330 million against a net loss of $38 million. “Compared to the $670 million in new capital that we’ve raised during this year, this puts us into a strong position for investing in our people, technology, and markets when thinking about the next few years ahead,” said Kuusi. 

Still, the investor darling has mountains to climb. The food delivery industry is flush with funding right now — and rapidly consolidating. London-based Deliveroo, the leading food delivery app in Europe which Amazon purchased a 16% stake in this past August, raised $180 million this month. After merging into JustEat Takeaway in a $7.8 billion deal in April, the UK’s Just Eat and  Netherland’s-based Takeaway beat out Uber to buy Grubhub for $7.3 billion in June. Meanwhile, DoorDash is valued at $61 billion after it’s December IPO. 

A niche in smaller markets

What investors like about Wolt is that it has figured out how to turn a profit in small, less dense cities that other companies avoid. (Fortune points out that UberEats has been losing up to $3.64 pre-tax per order in some less dense areas, compared to $4.85 in profits per order in large cities). Rather than hemorrhage cash on marketing to get UberEats, Deliveroo, Delivery Hero or JustEat Takeaway’s market share scraps in London (Europe’s most valuable market), Wolt has been setting up shop in underserved European towns and cities where these apps don’t exist yet. How? Wolt has built an “optimization-heavy logistics setup for last-mile delivery” that Kuusi says lets the service operate even in “very small cities with low income disparity, limited population density and high labor costs.”

Wolt is currently available in 23 countries and more than 120 cities across Europe, Asia and the Middle East, mostly in an underserved corridor from Scandinavia to Eastern Europe. The strategy of rapid expansion into small and middle-tier markets means the company has little overlap with its biggest competitor in Europe, Deliveroo.

Wolt delivers in more countries than Deliveroo, but fewer cities and work with less restaurants. Both European breakouts are far behind the scale of Grubhub or UberEats (UberEats is international while Grubhub is just in the US). 

Company

# of countries

# of cites

# of restaurants

Wolt

23

120

30,000

Deliveroo

12

500

80,000

Grubhub (JustEat Takeway)

1

4,000

300,000

UberEats

45

6,000

500,000

DoorDash

3

4,000

340,000

 

While restaurant numbers are still relatively small, Wolt added a huge number of partners early in 2021. Wolt promises that number will grow rapidly. “With this round, we’re able to take a much more long-term approach when it comes to thinking about investments and thinking about opportunities,” said Kuusi. “We’re going to continue to expand to new countries and new cities” Most recently, the company launched to Israel and Japan, where it’ll begin to compete with Tapingo, Order App, Demae-can, and Rakuten Delivery.

Building awareness

Wolt has come a long way from its launch, with just 10 restaurants in Helsinki and a handful of downloads in 2015. Today, Wolt has around 10 million users, and a rapidly growing set up of app reviews. The Finnish company’s 10,000 Apple App Store reviews pales in comparison to DoorDash’s 10 million, GrubHub’s 2.7 million, UberEats 1.6 million or even Deliveroo’s 75,000 (Wolt’s 102,000 Google Play reviews are closer to UberEats’ 3.4 million and DoorDash’s 1.18 million).

But, since June, as Wolt has expanded and spent on marketing, the company has outpaced its competitors like UberEats, DoorDash and Deliveroo when it comes to the rate at which it;s adding reviews on both the App Store and Google Play store. Wolt’s App Store reviews have increased over 90% since June, almost 50% faster than the next closest competitor, DoorDash. Meanwhile on the Google Play store, Wolt’s reviews are up 64%, 20% more than the next fastest grower, again, DoorDash.

The Amazon of underserved regions

Something else that attracted investors is Wolt’s plans to pivot diversify delivery options, moving into new verticals beyond retail and grocery. This year, Wolt began partnering with grocery stores, pharmacies and big box retailers, allowing orders of everything from a gallon of milk, to sneakers, to drug prescriptions on the app. 

Wolt isn’t the first food delivery app to pivot to retail. Postmates has been ranked as the most versatile delivery app, with selections like alcohol, medicine, liquor and groceries. In 2018, Doordash partnered with Walmart for grocery and retail deliveries. To keep up, in October, UberEats added an array of retailers including butchers and flower shops. However, Wolt would be the first in its underserved regions to focus so intensely on multi-retail delivery. In addition, Kuusi says that Wolt is investing in its own “dark convenience store” operation AKA warehouses of foods and goods, called “Wolt Market.” Wolt has its eyes on a hybrid model where it will stock its own products, as well as online retailers.

Kuusi says Wolt is aiming to be “the everything app.” If it sounds like Wolt is trying to compete with Amazon, that’s because it is. “Our mission is to enable local restaurants and other brick and mortar operators to have the tools at their disposal to provide a better e-commerce experience to their local customers than what their massive overseas competitors are able to do today,” said Kuusi, adding “We are huge believers that the next wave of e-commerce will go from same week and same day delivery to delivery within the next 30 minutes or so as the standard.”

Amazon isn’t as dominant in Europe or Asia — surprisingly, the giant only has dedicated online stores for 17 countries worldwide. Amazon launched in Sweden in October and currently has no direct operations in Norway or Finland. If Wolt can beat out Amazon-invested Deliveroo, which has been delivering groceries over the past few months, for first mover advantage, it’s not so crazy that the platform could serve as those regions’ Amazon.

Consolidation looms

Over the past year, five of the top delivery apps became three, with the JustEat Takeaway-Grubhub merger, and Uber’s purchase of Postmates. There are more customers than ever to go around — delivery sales are expected to rise 12% annually over the next five years. But conglomerate market shares make it hard for a new player like Wolt to compete on its own, especially since when delivery apps have larger numbers of customers, they can reduce delivery fees and still keep margins strong. 

Even with its barrage of funding, Wolt doesn’t have the same kind of cash. Still, with its technological prowess and an eye on markets others see as less desirable, competing solo is exactly what Wolt plans to do.“We definitely want to build this as a stand-alone company, that’s also one of the reasons why we raised this round,” Kuusi says.

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