Rapid delivery startup Zapp has raised $200m (£149m) in a Series B funding round to “focus on achieving profitability” in existing markets and to launch into new ones.
Lightspeed, 468 Capital and BroadLight Capital led the investment into London-based Zapp, which aims to deliver everyday items to customers’ doorsteps within 20 minutes at any time of day.
Atomico, Burda and Vorwerk Ventures also participated in the round, along with Formula One driver Lewis Hamilton.
It brings Zapp’s total funding to $300m. The company did not disclose its valuation.
Zapp will use the notable capital injection to compete with rivals such as Getir, GoPuff and Gorillas in the burgeoning rapid delivery market.
Founded in 2020 by Jo Falter and Navid Hadzaad, Zapp stocks thousands of items in micro-fulfilment centres known as “Zappstores”.
Consumers use the Zapp mobile app to make spontaneous purchases such as last-minute snacks and hygiene products.
Zapp’s riders collect and deliver orders via electric bikes, with the service available 24/7.
The startup said it will also use the funding to invest in its customer experience and technology.
Zapp’s strategy is to target so-called “megacities” where densely populated urban areas provide sufficient order volumes in an industry where margins are often razor-thin.
The convenience retail startup started with one Zappstore in West London but has since expanded across the UK and beyond.
In August last year, Zapp opened a fulfilment centre in Manchester and has dozens of Zappstores across the UK, including a 25,000 square foot distribution centre it opened in London last year.
The startup has also expanded internationally with an Amsterdam launch in July 2021.
“We’re on a long-term journey to build a technology-enabled supply chain that can deliver thousands of products to hundreds of millions of customers around the world faster and more sustainably than any other supply chain can today,” said Joe Falter, co-founder of Zapp, in an announcement on Friday.
“With this new capital, we will focus on achieving profitability in our existing markets as well as bringing Zapp to new customers globally.”
Investors are hungry for rapid delivery startups
Pandemic-induced stay at home restrictions have turbocharged the growth of rapid delivery startups. This has led to a market flush with investor cash that’s helped delivery startups keep prices low.
Berlin-based rapid delivery startup Gorillas raised “close to” $1bn in October, giving it a $2.1bn valuation just one year after it was founded by CEO Kağan Sümer.
And in October last year, Turkey-headquartered rapid delivery startup Getir acquired UK rival Weezy, suggesting that market consolidation may be vital for smaller players to survive.
Some, including the CEO of Ocado Retail, are sceptical about the economics of rapid on-demand delivery. There also remains the question of whether consumer habits picked up during the pandemic will last now that the UK is free from restrictions.
But Zapp’s latest funding shows investors are still bullish on rapid delivery and that they see a place for the service post-lockdown.
“Convenience retail is one of the last segments of retail to move fully online, but is really having its moment post-lockdown,” said Rytis Vitkauskas, partner at Lightspeed Venture Partners. “As people return to their busy lives, rapid delivery allows them to ‘live in the moment’ and Zapp has been built from the ground up to harness this consumer behaviour and is seeing exceptional customer loyalty as a result.”
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