Grocery Startup Fridge No More Shutters in Failed DoorDash Deal
Grocery Startup Fridge No More Shutters in Failed DoorDash Deal
(Bloomberg) -- Rapid grocery delivery startup Fridge No More permanently shut down its operations on Thursday after talks with DoorDash Inc. to buy some of its business fell through.
New York-based Fridge No More had been in discussions with DoorDash on a deal to offload its warehouses after the startup failed to secure funding from investors, according to people familiar with the matter. The food-delivery giant had been touring Fridge No More’s dark stores in February, but that process ended this month, the people said, asking for anonymity because the matter isn’t public.
“Investors were concerned about growing competition and about bad order economics, i.e. each order brings losses to the company,” Chief Executive Officer Pavel Danilov told employees in a Slack message reviewed by Bloomberg. “Fridge No More is no more and we are closing the business effective today.”
The Fridge No More app showed a message saying it was temporarily closed in New York on Thursday.
Founded in Brooklyn, New York in 2020, Fridge No More is among a spate of startups that have sprung up to offer consumers delivery of groceries within 15 minutes. The company raised $15 million last year in funding, Danilov told employees.
But the sector has begun to contract amid rising pressure from investors to demonstrate profitability.
Representatives from Fridge No More and DoorDash didn’t respond to calls requesting comment.
The closure of Fridge No More marks the second such app to go dark in recent weeks, following the furlough of employees at startup Buyk, including the company’s Chief Executive Officer James Walker. Buyk faces challenges because it can’t get financing from its Russian founders. Fridge No More also has ties to Russia but its problems appear to precede Russia’s invasion of Ukraine and the ensuing sanctions and restrictions on the flow of funds. Fridge No More CEO Danilov is from Russia and the company’s investors include Altair Capital, a venture capital fund led by investor Igor Ryabenkiy that has operations in Russia, the U.S. and Israel.
A combination of operational concerns that arose in due-diligence and the cost of assessing exposure and potential risk around the startup’s ties to Russia, ultimately killed the deal with DoorDash, the people said.
©2022 Bloomberg L.P.