DoorDash preps investment in controversial startup Gorillas

DoorDash, the US’s largest food delivery company, is set to take a stake in Gorillas, the Germany-based grocery delivery startup.

Gorillas is seeking to raise hundreds of millions of dollars of funding at a valuation of about $2.5 billion, far below the $6 billion it was previously working towards, according to media reports.

DoorDash, which doesn’t have a presence in Europe, has indicated interest in joining the round, although the size of its investment is unclear at this point, with talks believed to be ongoing.

Gorillas, meanwhile, has been facing protests over its treatment of delivery riders and warehouse workers, as well as the departure of senior executives, fuelling criticism of Chief Executive Kağan Sümer.

We care about the safety & wellbeing of our riders. Gorillas provides all riders with pedelecs & safety gear, with rain capes & rain trousers. Not everyone likes to ride in the rain – we get that. But rainfalls provide no basis for unauthorised strikes. pic.twitter.com/UxY9S1BAjy
— Gorillas (@gorillasapp) July 1, 2021

However, it insists it has a culture of inclusion, employee care and dialogue.

Gorillas has thus far raised more than $300 million from investors including Tencent, DST Global and Coatue Management. Its most recent round in March took its valuation past the $1 billion mark.

It says it is “on a mission to redefine convenience retail” and delivers from its own distribution hubs at “retail prices”.

The company was founded by Sümer and Jörg Kattner in May 2020 and started its service in Berlin.

Disruptive? Pah!

DoorDash might be wise to look elsewhere, according to Brittain Ladd, a former Amazon exec and supply chain consultant.

“I have concerns about Gorillas. For example, it only exists because of the large amount of venture capital it has attracted,” he says in a LinkedIn post.

“Due to its incredible rate of burning cash to fund expansion and operations, it is actively seeking additional capital. Gorillas lacks anything that can be considered disruptive in terms of technology or a unique business model that's hard to duplicate.”

He adds: “I strongly recommend that DoorDash acquire Gorillas only if they can do so for a price well below $1 billion. Without a disruptive technology platform or a one of a kind business model, I believe Gorillas is only worth a few hundred million dollars.”

DoorDash should also not invest unless it plans on replacing Sümer. “Investing in Gorillas carries too much risk for DoorDash without placing hand picked executives into the company,” Ladd concludes.