This post is by Anna Heim from Fundings & Exits – TechCrunch
Last week, Deliveroo made news when it announced it was preparing to leave the Spanish market. The recently listed Deliveroo couched its explanation in market terms, noting its market position in Spanish on-demand delivery wasn’t sufficient to warrant continued investment. Left unmentioned: A Spanish legal change requiring companies that previously depended on freelance couriers to hire their delivery staff.
Race Capital’s Edith Yeung helped explain the Deliveroo choice to The Exchange, saying the Spanish market doesn’t have a very large population, which may mean that the “potential upside for being #1 in Spain has [a] ceiling.”
While she noted that she doesn’t have access to Deliveroo data, her statement jibes with the company’s own comment that Spain made up less than 2% of its aggregate gross transaction value (GTV) in the first half of 2021.
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One company exiting a market is not a big deal, but we were curious about Deliveroo’s comments regarding the need for market leadership — or something close to it — to warrant continued investment. Is this the common reality for startups battling for market position, no matter if those markets are cities or countries?
Some startup markets have trended toward monopolies or duopolies. The Uber-Didi battle in China led to the companies agreeing to stop competing. Uber also recently sold its Uber Eats business in India to Zomato. In the United States, Uber (Read more...)