More consolidation is taking place in the world of online food delivery. TechCrunch has learned and confirmed that GrubMarket — the startup backed by Tiger Global, among others, that has quietly built a B2B empire in produce and grocery logistics — has acquired Good Eggs, the once-feted fresh food delivery startup that more recently fell on hard times.
The terms of the deal are not being disclosed but we understand from sources close to the deal that it was a stock transaction with a valuation marginally higher than Good Eggs’ last valuation, which was $22 million. Investors proactively approached GrubMarket looking for an exit for Good Eggs.
We can also confirm that Good Eggs will be run by a new leader under GrubMarket. Keith Brewer, who was the COO of GrubMarket-owned Daylight Foods, will head up Good Eggs. While a number of Good Eggs’ staff are expected to come over to GrubMarket, it’s not yet clear whether Rodrigo Arevalo, the Uber alum who is currently listed as Good Eggs’ CEO, will be staying on as part of that.
This is a pretty major turn for Good Eggs, and one more signal of how investors that have pumped hundreds of millions of dollars into perpetually loss-making startups are now looking to draw a line under those activities and move on.
Good Eggs, for context, valued as high as $365 million in November 2020 per PitchBook data (a round it announced in 2021), with a vaunted investor list that included Benchmark, Index, Sequoia and Thrive among many others. Post COVID-19, however, it hit the rocks, and it was most recently marked down a whopping 94% last year, landing it at that $22 million valuation.
GrubMarket, meanwhile, is now valued at around $3.5 billion and has raised over $560 million in funding. The company has long has its eye on an IPO although with the public markets still extremely volatile for tech stocks, and the IPO window open just a crack. Mike Xu, GrubMarket’s founder and CEO, declined to comment on that when interviewed for this story. (There is a chance there could be more financing getting announced, too: GrubMarket’s $3.5 billion valuation was reported by CNBC earlier this year; PitchBook’s last valuation of $2.2 billion dates from 2022.)
GrubMarket was initially a competitor, and then a supplier to Good Eggs, and the changing nature of that relationship may well provide a window into why some companies succeed in the grocery logistics and delivery space, and some do not.
Both Good Eggs and GrubMarket launched, respectively in 2011 and 2014, with a focus on B2C, specifically delivering boxes of fresh food to consumers and businesses. But later, as Good Eggs kept its eyes on consumer, GrubMarket pivoted to concentrating on the B2B opportunity, and it scaled fast working both with smaller grocers as well as major ones.
Whole Foods is its biggest customer, although it supplies groceries and beyond to other majors like Walmart, as well as other big names like Stanford University, and in the last few years Good Eggs itself. With a pretty relentless eye on margins, unit economics, KPIs, and long relationships with suppliers — and I’d add a pretty intense work ethic, judging by the lack of sleeping hours of its founder — GrubMarket is profitable and has been for some time.
“Profitability is in our DNA,” Xu said. “We know how to get things profitable. It’s a systematic approach.”
Xu added that the focus still remains very much on B2B for his company — it has made more than 80 acquisitions, most of them to bolster that business — although acquisitions like Good Eggs underscore how it could use its economies of scale to revisit B2C again. Still, Xu described the deal as “optimistic” rather than opportunistic.
Grocery delivery and food startups overall have faced a lot of ups and downs, with some categories hit especially hard. Getir, a major player in “instant” grocery delivery that aggressively raised hundreds of millions of dollars (from some of the same backers as Good Eggs, as it happens), earlier this year cut its losses and retreated to its home market of Turkey. Others are struggling to raise at strong valuations, while a few like GrubMarket play the role of consolidator to improve cost structure. Publicly-traded Instacart is due to announce earnings today, which could prove a bellwether to how others will fare.