The online food and grocery delivery space is becoming more consolidated. TechCrunch has learned and confirmed that GrubMarket, a startup that has quietly built a B2B empire in produce and grocery logistics and is now valued at $3.5 billion, recently acquired Good Eggs, a once-popular fresh food delivery startup that was in trouble.
Financial terms of the deal were not disclosed, but a source with knowledge of the deal told TechCrunch that the deal was an all-stock transaction and valued Good Eggs slightly above its previous valuation of $22 million. The source also said that Good Eggs investors had been actively reaching out to GrubMarket to find an exit.
TechCrunch has confirmed that Good Eggs will be run by a new leader under GrubMarket. Keith Brewer, who was COO of GrubMarket-owned Daylight Foods, will lead Good Eggs. Many of Good Eggs’ staff are expected to move to GrubMarket, but it’s unclear whether Uber alum Rodrigo Arevalo, who is currently listed as Good Eggs’ CEO, will stay.
This is a very important turning point for Good Eggs, and another example of how investors who have been pouring hundreds of millions of dollars into money-losing startups are now drawing a line under the sand and moving in a different direction.
For context, Good Eggs was valued at $365 million in November 2020, according to PitchBook data (a round announced in 2021), and had a proud investor roster that included Benchmark, Index, Sequoia, Thrive, and many others. But it hit a snag as the COVID-19 tailwinds wore off, eventually falling a whopping 94% last year to a valuation of $22 million.
Meanwhile, GrubMarket is currently valued at around $3.5 billion and has raised over $560 million in funding. The company is backed by Tiger Global and others. GrubMarket’s $3.5 billion valuation was reported by CNBC earlier this year.
GrubMarket initially competed with Good Eggs, but eventually began supplying the startup. The changing nature of that relationship could be a good example of why some companies succeed in grocery logistics and delivery, and why others don’t.
Good Eggs and GrubMarket launched in 2011 and 2014, respectively, and focused on B2C, specifically delivering boxes of fresh food to consumers and businesses. But later, as Good Eggs turned its attention to consumers, GrubMarket began focusing on B2B opportunities, quickly expanding to work with both small and large grocers.
Whole Foods is GrubMarket's largest customer. It also supplies groceries and other items to major department stores like Walmart and other well-known brands like Stanford University. With its constant focus on margins, unit economics, KPIs, and long-term relationships with suppliers, GrubMarket has been profitable for some time.
“Profitability is in our DNA,” said Mike Xu, GrubMarket CEO and founder. “We know how to be profitable. It’s a systematic approach.”
He added that the company’s focus remains B2B. The company has made more than 80 acquisitions, most of which have bolstered its B2B business, but acquisitions like Good Eggs highlight how it can use economies of scale to rethink B2C. Still, he described the deal as “optimistic” rather than opportunistic.
Grocery and food delivery startups have seen their fair share of ups and downs, with some categories taking a pretty big hit. Getir, a major player in “instant” grocery delivery, aggressively raised hundreds of millions of dollars (from backers like Good Eggs, in fact), then cut its losses and pulled back to its home base in Turkey earlier this year. Other startups are struggling to raise money at strong valuations, and some, like GrubMarket, are acting as consolidators to improve their cost structures. U.S.-based Instacart is due to report its second-quarter results today, which could be a sign for other companies in the space.
