Rapid grocery delivery app Zapp joins sector fundraising boom
Zapp, one of the new breed of rapid grocery delivery apps engaged in a battle for share of British shoppers’ wallets, is opening talks about a new round of funding less than seven months after tapping investors for nearly $100m (£72.5m).
Sky News has learnt that Zapp has hired JP Morgan, the Wall Street banking giant, to advise on its next capital-raising, underlining the rapacious rate at which food delivery platforms are devouring investors’ money.
One investor who was aware of the 15 month-old start-up’s plans said that talks had got underway about its Series B funding round very recently, and was expected to take some time to complete.
They said it was likely that Zapp would be seeking at least another $100m, although the precise figure was unclear on Friday.
Zapp Pic: Zapp
News of Zapp’s plans comes just days after Gorillas, a rival, announced that it had raised close to $1bn, with Delivery Hero, one of the world’s largest restaurant delivery apps, leading the round as a new investor.
Getir, an Istanbul-based app which operates in the UK, saw its valuation surge to $7.5bn earlier this year when it raised $550m from investors.
The UK – and London in particular – have become a key battleground for the emerging rapid delivery sector, which is placing a bold bet on consumers’ desire to receive products little more than 10 minutes after ordering them.
Zapp, which was founded in London by Joe Falter and Navid Hadzaad, promises to deliver grocery and other essential items to customers’ doorsteps within 20 minutes, and operates around the clock.
Its “sweet spot” is impulse purchases and urgent-need items such as snacks, drinks, essential groceries, personal health and hygiene goods, and over-the-counter medicines.
Earlier this year, it emerged that leading European venture capital funds including Atomico and Silicon Valley’s Lightspeed had backed the company.
Zapp operates its own dark stores, which exist solely to fulfil online orders, in affluent London areas including Chelsea, Fulham, Hammersmith and Notting Hill.
Other so-called Zappstores – locations from which customer orders are picked – are located in cities such as Manchester and Amsterdam.
During the summer, it struck a deal to back the Champions’ League winners, Chelsea, as part of efforts to differentiate itself in an intensely crowded market.
It is attempting to address consumer concerns about the sustainability of such on-demand platforms by partnering with the food-waste app Olio.
A source close to Zapp said that two-thirds of customer orders were already profitable, and that its business in London was growing at double-digit percentage rates month-on-month.
The rapid delivery sector is, however, already showing signs of strain, with Dija, a UK-based start-up, surrendering its independence and selling to GoPuff of the US.
Weezy, another early-stage player, is working with investment bankers on options including selling itself to a competitor.
Many investors have expressed scepticism about the wisdom of ploughing money into the industry, with some seasoned investors predicting that most of the capital raised in the last 12 months will ultimately be lost as a wave of consolidation takes hold.
A number of other takeovers in the sector are said to be under consideration.
Zapp declined to comment on Friday.
Business
Donald Trump tells UK to ‘get rid of windmills’ and says raising windfall tax on North Sea oil is ‘big mistake’
Donald Trump has said the UK is making “a very big mistake” in its fossil fuel policy – and should “get rid of windmills”.
In a post on Friday on his social media platform, Truth Social, Mr Trump shared news from November of a US oil producer pulling out of the North Sea, a major oil-producing region off the Scottish coast.
“The UK is making a very big mistake. Open up the North Sea. Get rid of windmills!”, the US president-elect wrote.
The Texan oil producer Apache said at the time it was withdrawing from the North Sea by 2029 in part due to the increase in windfall tax on fossil fuel producers.
North Sea oil rig. Pic: Reuters
The head of Apache’s parent company APA Corporation said in early November it had concluded the investment required to comply with UK regulations, “coupled with the onerous financial impact of the energy profits levy [windfall tax] makes production of hydrocarbons beyond the year 2029 uneconomic”.
Chief executive John Christmann added that “substantial investment” will be necessary to comply with regulatory requirements.
Mr Trump used a three-word campaign pledge “drill, baby, drill” during his successful election campaign, claiming he will increase oil and gas production during his second administration.
In the October budget announcement, UK Chancellor Rachel Reeves raised the windfall tax levied on profits of energy producers to 38%.
Called the energy price levy, it is a rise from the 25% introduced by Rishi Sunak in 2022 as energy prices soared following Russia’s invasion of Ukraine.
Many oil and gas businesses reported record profits in the wake of the price hike.
The tax was intended to support households struggling with high gas and electricity bills amid a broader cost of living crisis.
Apache is just one of a glut of firms that made decisions to alter their North Sea extraction due to the Labour policy.
Read more
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Even before the new government was elected, three companies, Jersey Oil and Gas, Serica Energy and Neo Energy – announced they were delaying, by a year, the planned start of production at the Buchan oilfield 120 miles to the north-east of Aberdeen.
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