Food delivery platform Glovo worth €1bn after €150m raise

19 Dec 2019363 Views

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Ending a year of big stories in the on-demand food delivery industry, Spain’s Glovo announced that it is now worth €1bn after a €150m Series E round.

The past year has been huge for on-demand food delivery start-ups in Europe. In 2019, we saw Just Eat reject a £4.9bn takeover bid from Prosus, right after one of its shareholders attempted to block a £9bn merger with Takeaway.com.

Meanwhile, Deliveroo reported that its losses increased to £232m 2018 and the UK food delivery platform had a significant deal with Amazon stalled by the UK’s Competition and Markets Authority.

To round off a busy year in this industry, Spanish food, grocery and pharmaceuticals delivery company Glovo has announced its unicorn status, which comes after the start-up raised $150m in Series E funding.

Glovo’s latest funding round

The funding round was led by Mubadala, with support from previous investors Drake Enterprise, Idinvest and Lakestar. Mubadala Investment Company is a sovereign investor managing a global portfolio aimed at generating sustainable financial returns for the government of Abu Dhabi.

The $150m investment sees the company surpass a $1bn valuation, which makes Glovo the second privately held business in Spain to reach unicorn status.

The Barcelona-based start-up said that it is also now among the top two delivery players in 24 of the 26 countries in which it operates in Europe, Africa and Latin America. With the latest round of funding, the company said it is committed to taking its engineering capabilities and technology systems to the next level.

Glovo recently entered the Polish market, acquiring Pizza Portal in a €35m deal, before investing in a second technology hub in Warsaw. The business plans to expand its global tech team by hiring 300 additional engineers by mid-2020, with 40 dedicated engineers and 50 tech and product experts to be based in the new Warsaw office.

The company will also increase its focus on groceries and partnerships with leading retailers to build out its multi-category offering. Glovo said it is now seeking strategic partnerships, similar to the deal it has with Carrefour, while investing in its own dark supermarkets which cater exclusively to online shoppers.

Glovo has seven such dark stores in Europe and Latin America – with locations in Barcelona, Madrid, Buenos Aires and Lima – and plans to open 100 by 2021.

To date, the company has raised more than $500m.

Making everything in a city instantly available

Commenting on Glovo’s funding and unicorn announcement, co-founder and CEO Oscar Pierre said: “We’re very pleased to welcome Mubadala as an investor, as well as to further strengthen our position within the industry.

“To have achieved unicorn status is something truly exciting and a testament to the talent within the company, and their determination to keep innovating and disrupting the on-demand delivery space. Despite our rapid growth and new status, we still have the same vision we’ve always had: to make everything within the city instantly available to our customers.”

Frederic Lardieg, partner in the European ventures team at Mubadala Capital, said: “In June 2018, Mubadala launched a €400m fund to invest in leading European technology companies like Glovo.

“Our investment is a testament to our commitment to the European tech market and we are excited to lead this Series E funding round to enable Glovo to grow their team and support the expansion of their offering.”

Controversy

Much like other food delivery start-ups that operate in the gig economy, Glovo has been involved in a number of controversies, relating to the couriers that keep the business afloat.

In May 2019, there were major protests in Barcelona after a 22-year-old delivery rider was killed on the job.

According to TechCrunch, the man was substituting for a registered Glovo courier at the time that he was killed by a truck. The Nepalese man had not been in possession of a visa allowing him to legally work in Spain.

At the time, Spain’s UGT trade union said: “UGT believes that the company, Glovo, imposes on its workers, through deception and abuse of their vulnerable status, labour conditions and social security conditions that violate the protections afforded to them by law.”

TechCrunch highlighted that with Glovo, jobs are distributed based on driver delivery speed and their availability between specific hours, which means that if a rider does not make themselves available when the app demands, their chances of securing jobs in future becomes lower.

Natasha Lomas, a reporter for TechCrunch, wrote that “the safety concerns attached to gig economy platforms’ algorithmic management, and the practice of registered riders substituting themselves … in order to try keep up with the work rate being demanded by sharing their account with a non-registered rider” leaves workers on these platforms at a disadvantage.

Glovo responded to this incident by saying: “Glovers passing on requests to people who aren’t registered on the platform is illegal and this is communicated to our couriers.

“The safety of our couriers is of paramount importance to us and it’s vital that they go through road safety practices we provide during the informative sessions before they sign up. We have solutions in place for partners and users to report cases such as this, where people are not officially registered on the platform, to prevent potential harm.”

Kelly Earley is a journalist with Siliconrepublic.com

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