Fifth Wall joins US$290 Million Series B for on-demand grocery delivery startup, Gorillas
Founded in Berlin in 2020 by Kağan Sümer and Jörg Kattner, Gorillas is an on-demand, ultra-fast grocery delivery company operating in major cities across France, Germany, the Netherlands, and the United Kingdom. The company’s recent US$290 million financing makes it one of the fastest European startups to become a unicorn in a Series B funding round. Fifth Wall is investing alongside a number of fantastic partners including lead investors Coatue Management, DST Global, and Tencent, as well as Atlantic Food Labs and Dragoneer. The new funding will be used to drive growth as Gorillas seeks to expand to 10 countries and more than 50 cities, including Paris and New York City.
The Market Opportunity
Gorillas addresses a large consumer market which seeks frequent and fresh groceries outside of a bulk weekly or monthly shopping trip. In order to meet this demand, it delivers groceries and other household items for a fee of around two dollars, and in approximately 10 minutes time, which is faster than it takes most consumers to travel to a supermarket or convenience store.
Grocery shopping is one of the largest consumer categories on earth — research indicates that the European market alone is predicted to reach $2.4 trillion by 2022 — but one of the least penetrated from an online perspective. According to Bain & Company, about 8–10 percent of all grocery shopping in the United Kingdom and France is done online, while less than 5 percent of grocery sales throughout the rest of Europe take place online. Nevertheless, grocery delivery has seen strong tailwinds as a result of the pandemic and a rise in ecommerce. This has led to double-digit growth for online grocery in Europe, and the category expects to see an average compounded annual growth rate of approximately 20 percent in 2021.
Disrupting the Traditional Shopping and Supply Chain Experience
Online grocery delivery has traditionally been a difficult market for incumbents to penetrate, given the complexity of cold-chain storage, complex operations, lack of delivery infrastructure, and low margins. Simply innovating is unlikely to yield results. Instead, a full-stack approach is required. Gorillas’ model combines urban logistic micro-fulfilment centers (also known as dark stores) with an ultra-fast delivery offering for consumers located within a one-mile radius of the store.
By disrupting the supply chain and shopping experience of traditionally slow and inflexible retail companies, Gorillas seeks to address new grocery consumer behaviors rooted in the desire for convenience and instant gratification. According to CEO and Founder Kağan Sümer, the company has a simple goal: “To change the game in the grocery retail market, which has been slow to implement new and speedier technological solutions. We essentially simplify the process of doing groceries.”
Synergies for Fifth Wall LPs and Gorillas
Real estate is a vital component of Gorillas’ model. Consumer demand for ultra-fast deliveries, flexibility in scheduling, and the ability to return items requires centrally-located real estate. However, the urban footprint needed to meet demand is scarce. In order for last-mile delivery models to be successful, new assets need to be constructed or existing assets repurposed. A lack of supply has compounded this challenge, driving up rents for new operators.
The need for access to affordable, accessible real estate makes Fifth Wall an ideal partner as Gorillas expands throughout Europe and the United States. Fifth Wall’s limited partners (LPs) are some of the world’s largest and most influential real estate corporations, offering a rich network of potential partnerships, particularly among retail and industrial-focused operators and brokers. Because Fifth Wall’s LPs own property in some of the world’s most desirable locations and city centers, they could provide Gorillas a competitive advantage — access to prime real estate. In turn, Fifth Wall can offer Gorillas specialized insights within the retail and industrial asset classes.
As for our real estate partners and landlords, companies like Gorillas create a new ‘horizontally-distributed’ asset class that is currently not yet institutionalized.
Gorillas has a proven track record in the food delivery sector. The company has boasted impressive growth since inception, coupled with rapid geographic expansion, strong customer retention, and overall customer stickiness. In just over ten months, Gorillas had expanded to more than 12 cities, including Amsterdam, London, and Munich, and built more than 40 micro fulfillment centers.
To learn more about Gorillas, visit its website here.
Forward-looking statements and opinions as to real estate markets or any other matters, as expressed in this post cannot constitute a guarantee of future success or profitable results. As a result, investors should not rely on such forward-looking statements and/or opinions, or on anything else contained in this post, in making their investment decisions.
The information discussed above is presented solely for informational purposes and should not be interpreted as an offer or recommendation to buy or sell securities.
The portfolio companies described above may not be representative of all investments in funds managed by Fifth Wall, as the number and composition of investments will vary over time. There can be no assurance that any investment will be profitable or that future investments will have similar characteristics or results. Certain portfolio companies may be excluded from this list if the company requests that it not be publicized or included on this website. The inclusion of a portfolio company in the above list should not be considered a recommendation or endorsement of Fifth Wall by that company.