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Grocery deliverer JOKR doubles down on Brazil as it secures $50M on $1.3B valuation

JOKR hit gross-profit status last April, but was swept into the challenging economic environment that affected the instant grocery delivery sector over…

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After a challenging few months that included closing markets, instant grocery delivery company JOKR told TechCrunch it raised about $50 million in a Series C investment on a $1.3 billion post-money valuation.

The funding, which The Information first reported that JOKR was seeking last September, follows a $260 million raise announced in November 2021. However, with the valuation the company is getting a slight bump, up from the $1.2 billion pre-money valuation from the Series B.

“It’s not a huge uptake in terms of valuation, and obviously something that, despite the market correction, still shows that we’ve been able to build traction to grow and to become more profitable,” JOKR co-founder and CEO Ralf Wenzel told TechCrunch. “Otherwise those terms would not have been justifiable. We’re happy about the fact that we closed the Series C round and it comes at an increased valuation from new and existing investors.”

The new investment was buoyed by existing investors, with G Squared leading the round and GGV Capital, Tiger Global Management and HV Capital participating. In total, JOKR has raised $480 million in equity and debt since being founded in 2021.

Difficult decisions

Wenzel went after the new funding “to make sure that we have a fully funded business plan and that we can become fully self-sustainable and don’t have to be more dependent on external capital.”

It has indeed been quite a roller coaster ride for the company in the last year. In its report, The Information said that JOKR was losing $10 million a month. Wenzel confirmed the company is “still losing money,” but that this figure included countries and cities in which it no longer operates, so the losses have narrowed to single-digit millions of dollars each month currently.

JOKR hit gross-profit status last April, but was swept into the challenging economic environment that affected the instant grocery delivery sector, stemming in part by people returning to grocery shopping in person as the pandemic eased, a slowdown in venture capital investments and the war in the Ukraine.

As such, at the beginning of summer 2022, the company cited “global economic uncertainty” as the reason for announcing it would shutter its New York and Boston deliveries. Then this month, it officially left Colombia after previously closing locations in Medellin and Santiago, Chile in November. The company continues to operate in Brazil, Mexico and Peru, but is discussing strategic options for both markets to foster its focus on the Brazilian market, according to Wenzel.

JOKR’s instant grocery delivery app. Image Credits: JOKR

The decisions derived from an ongoing assessment of its different business units, and a determination of where JOKR has the best chance at balancing growth and profitability, Wenzel said.

“It’s not a ‘winner takes all market’,” he said, but more like a “’winner takes most market’,” he added.

Asked how he can be optimistic about JOKR’s future when the instant grocery delivery sector is challenged more broadly right now, Wenzel said it boils down to a different balance between long-term growth and short-term profitability and also the company’s focus on profitability over geographic spread.

“We, therefore, took the decision to fully focus on geographies that match these expectations and are on a clear path to profitability, without compromising on our vision and customer promise or sacrificing the huge long-term growth potential in one of the largest underpenetrated regions in the world,” he said.

In addition, JOKR focused on customer experience, which is why, he said, the company consistently has a Net Promoter Score above 80.

“We sincerely believe that e-commerce needs to respond to increasing customer demand for relevance, reliability sustainability and joy,” he added. “JOKR is focused on building a new generation of retail, through vertical integration and superior data science and technology. We achieved full operating leverage with positive gross margins within just one year and kept growing ever since.”

Unbagging instant grocery delivery

The instant grocery delivery sector was at its peak during the global pandemic when fewer people were leaving their homes. Startup companies were coming online in droves and attracting some serious venture capital.

However, as the virus became something we all had to learn to live with, people returned to their normal in-person grocery shopping behaviors. This left much of the quick-commerce sector to find out if their business models could survive in a crowded space, just as capital became scarce.

“Some [delivery startups] are most certainly safe — especially the ones with positive unit economics,” Matt Birnbaum, the former head of talent acquisition at Instacart and now a talent partner at Pear VC, told my colleague Kyle Wiggers back in June. “The good delivery companies can slow their spend in growth areas like hiring and marketing and become profitable almost immediately. The companies that are in the most danger are the ones who don’t have a clear path to profitability in the short or medium term. As access to capital has become more constrained, so has the appetite for growth at all costs.”

Unfortunately, what resulted were announcements of companies buckling against the strain and being acquired or folding over the past year. For example, Buyk, Fridge No More and Zero Grocery ceased operations — with Zero doing so just weeks after announcing a new funding round. We also saw some of the giants, like Gopuff, announce staff reductions, as did Zapp.

Meanwhile, my colleague Ingrid Lunden reported on Turkey-based Getir acquiring German competitor Gorillas, which had been “exploring strategic options” since May and had laid off staff. This was after Getir itself had announced plans to cut its global workforce by 14% and slow down expansion plans.

Delivering for Brazil

Having faced layoffs and market closures, Wenzel said the continued investor confidence is proof that where JOKR is headed today and tomorrow is on the right track. The Series C round closed in December.

Meanwhile, Wenzel said business in Brazil “has been thriving, growing consistently and getting more profitable.” Brazil accounts for 50% of JOKR’s business, and the new funding will enable the company to double down in this region while it looks strategically at other geographies. He adds that the company is gross margin positive in Brazil and expects JOKR to reach full profitability by the first quarter of 2024.

Brazil is a big market for on-demand grocery delivery. It’s been growing, on average, 32% each year since 2019, and together, the market generated an estimated $3.1 billion in revenue in 2022. The market is expected to grow about 10% each year through 2027, which would effectively double the market, according to Ken Research.

The market also has some fierce competition. Some of the big players serving the country include iFood, Rappi and Mercado Libre. Uber Eats had been on that list until early 2022, when it announced it was closing its business there.

Brazil is also big enough that players from other parts of Latin America can come in and take a sizable chunk of market share. Mexico-based online grocer Jüsto entered the market in October 2021 and told TechCrunch in 2022 that it was seeing monthly growth between 30% and 40% and that the market already represented 25% of Jüsto’s revenue. In addition, Diferente, a new Brazilian online grocery delivery company, saw average order volume increase for its produce boxes go from 13.8% to 17.2% in the past 10 months.

Next steps

Instant grocery delivery is here to stay, but the future of how the companies operate might look different in the way they generate revenue. For example, DoorDash is now returning packages for customers.

However, Wenzel maintains that JOKR’s plans to increase revenue won’t be “achieved on the back of the customer.” Instead, the company’s vertically integrated infrastructure enables it to go to local producers to source food and to charge customers the same prices they would see in the grocery store.

“Brazil’s domestic food production is not dependent on imports,” he added. “You can vertically integrate because 90% of the food that is being consumed in Brazil is being produced in Brazil. This is not so doable in the United States or Europe and is why it has allowed us to unlock a very high margin of operation.”

Got a news tip or inside information about JOKR, grocery delivery or another topic? I’d love to hear from you. You can reach me via Signal at 832.862.1051. Or drop us a note at tips@techcrunch.com. Happy to respect anonymity requests.

Grocery deliverer JOKR doubles down on Brazil as it secures $50M on $1.3B valuation by Christine Hall originally published on TechCrunch

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Angry Shouting Aside, Here’s What Biden Is Running On

Angry Shouting Aside, Here’s What Biden Is Running On

Last night, Joe Biden gave an extremely dark, threatening, angry State of the Union…

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Angry Shouting Aside, Here's What Biden Is Running On

Last night, Joe Biden gave an extremely dark, threatening, angry State of the Union address - in which he insisted that the American economy is doing better than ever, blamed inflation on 'corporate greed,' and warned that Donald Trump poses an existential threat to the republic.

But in between the angry rhetoric, he also laid out his 2024 election platform - for which additional details will be released on March 11, when the White House sends its proposed budget to Congress.

To that end, Goldman Sachs' Alec Phillips and Tim Krupa have summarized the key points:

Taxes

While railing against billionaires (nothing new there), Biden repeated the claim that anyone making under $400,000 per year won't see an increase in their taxes.  He also proposed a 21% corporate minimum tax, up from 15% on book income outlined in the Inflation Reduction Act (IRA), as well as raising the corporate tax rate from 21% to 28% (which would promptly be passed along to consumers in the form of more inflation). Goldman notes that "Congress is unlikely to consider any of these proposals this year, they would only come into play in a second Biden term, if Democrats also won House and Senate majorities."

Biden also called on Congress to restore the pandemic-era child tax credit.

Immigration

Instead of simply passing a slew of border security Executive Orders like the Trump ones he shredded on day one, Biden repeated the lie that Congress 'needs to act' before he can (translation: send money to Ukraine or the US border will continue to be a sieve).

As immigration comes into even greater focus heading into the election, we continue to expect the Administration to tighten policy (e.g., immigration has surged 20pp the last 7 months to first place with 28% in Gallup’s “most important problem” survey). As such, we estimate the foreign-born contribution to monthly labor force growth will moderate from 110k/month in 2023 to around 70-90k/month in 2024. -GS

Ukraine

Biden, with House Speaker Mike Johnson doing his best impression of a bobble-head, urged Congress to pass additional assistance for Ukraine based entirely on the premise that Russia 'won't stop' there (and would what, trigger article 5 and WW3 no matter what?), despite the fact that Putin explicitly told Tucker Carlson he has no further ambitions, and in fact seeks a settlement.

As Goldman estimates, "While there is still a clear chance that such a deal could come together, for now there is no clear path forward for Ukraine aid in Congress."

China

Biden, forgetting about all the aggressive tariffs, suggested that Trump had been soft on China, and that he will stand up "against China's unfair economic practices" and "for peace and stability across the Taiwan Strait."

Healthcare

Lastly, Biden proposed to expand drug price negotiations to 50 additional drugs each year (an increase from 20 outlined in the IRA), which Goldman said would likely require bipartisan support "even if Democrats controlled Congress and the White House," as such policies would likely be ineligible for the budget "reconciliation" process which has been used in previous years to pass the IRA and other major fiscal party when Congressional margins are just too thin.

So there you have it. With no actual accomplishments to speak of, Biden can only attack Trump, lie, and make empty promises.

Tyler Durden Fri, 03/08/2024 - 18:00

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International

United Airlines adds new flights to faraway destinations

The airline said that it has been working hard to "find hidden gem destinations."

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Since countries started opening up after the pandemic in 2021 and 2022, airlines have been seeing demand soar not just for major global cities and popular routes but also for farther-away destinations.

Numerous reports, including a recent TripAdvisor survey of trending destinations, showed that there has been a rise in U.S. traveler interest in Asian countries such as Japan, South Korea and Vietnam as well as growing tourism traction in off-the-beaten-path European countries such as Slovenia, Estonia and Montenegro.

Related: 'No more flying for you': Travel agency sounds alarm over risk of 'carbon passports'

As a result, airlines have been looking at their networks to include more faraway destinations as well as smaller cities that are growing increasingly popular with tourists and may not be served by their competitors.

The Philippines has been popular among tourists in recent years.

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United brings back more routes, says it is committed to 'finding hidden gems'

This week, United Airlines  (UAL)  announced that it will be launching a new route from Newark Liberty International Airport (EWR) to Morocco's Marrakesh. While it is only the country's fourth-largest city, Marrakesh is a particularly popular place for tourists to seek out the sights and experiences that many associate with the country — colorful souks, gardens with ornate architecture and mosques from the Moorish period.

More Travel:

"We have consistently been ahead of the curve in finding hidden gem destinations for our customers to explore and remain committed to providing the most unique slate of travel options for their adventures abroad," United's SVP of Global Network Planning Patrick Quayle, said in a press statement.

The new route will launch on Oct. 24 and take place three times a week on a Boeing 767-300ER  (BA)  plane that is equipped with 46 Polaris business class and 22 Premium Plus seats. The plane choice was a way to reach a luxury customer customer looking to start their holiday in Marrakesh in the plane.

Along with the new Morocco route, United is also launching a flight between Houston (IAH) and Colombia's Medellín on Oct. 27 as well as a route between Tokyo and Cebu in the Philippines on July 31 — the latter is known as a "fifth freedom" flight in which the airline flies to the larger hub from the mainland U.S. and then goes on to smaller Asian city popular with tourists after some travelers get off (and others get on) in Tokyo.

United's network expansion includes new 'fifth freedom' flight

In the fall of 2023, United became the first U.S. airline to fly to the Philippines with a new Manila-San Francisco flight. It has expanded its service to Asia from different U.S. cities earlier last year. Cebu has been on its radar amid growing tourist interest in the region known for marine parks, rainforests and Spanish-style architecture.

With the summer coming up, United also announced that it plans to run its current flights to Hong Kong, Seoul, and Portugal's Porto more frequently at different points of the week and reach four weekly flights between Los Angeles and Shanghai by August 29.

"This is your normal, exciting network planning team back in action," Quayle told travel website The Points Guy of the airline's plans for the new routes.

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International

Walmart launches clever answer to Target’s new membership program

The retail superstore is adding a new feature to its Walmart+ plan — and customers will be happy.

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It's just been a few days since Target  (TGT)  launched its new Target Circle 360 paid membership plan. 

The plan offers free and fast shipping on many products to customers, initially for $49 a year and then $99 after the initial promotional signup period. It promises to be a success, since many Target customers are loyal to the brand and will go out of their way to shop at one instead of at its two larger peers, Walmart and Amazon.

Related: Walmart makes a major price cut that will delight customers

And stop us if this sounds familiar: Target will rely on its more than 2,000 stores to act as fulfillment hubs. 

This model is a proven winner; Walmart also uses its more than 4,600 stores as fulfillment and shipping locations to get orders to customers as soon as possible.

Sometimes, this means shipping goods from the nearest warehouse. But if a desired product is in-store and closer to a customer, it reduces miles on the road and delivery time. It's a kind of logistical magic that makes any efficiency lover's (or retail nerd's) heart go pitter patter. 

Walmart rolls out answer to Target's new membership tier

Walmart has certainly had more time than Target to develop and work out the kinks in Walmart+. It first launched the paid membership in 2020 during the height of the pandemic, when many shoppers sheltered at home but still required many staples they might ordinarily pick up at a Walmart, like cleaning supplies, personal-care products, pantry goods and, of course, toilet paper. 

It also undercut Amazon  (AMZN)  Prime, which costs customers $139 a year for free and fast shipping (plus several other benefits including access to its streaming service, Amazon Prime Video). 

Walmart+ costs $98 a year, which also gets you free and speedy delivery, plus access to a Paramount+ streaming subscription, fuel savings, and more. 

An employee at a Merida, Mexico, Walmart. (Photo by Jeffrey Greenberg/Universal Images Group via Getty Images)

Jeff Greenberg/Getty Images

If that's not enough to tempt you, however, Walmart+ just added a new benefit to its membership program, ostensibly to compete directly with something Target now has: ultrafast delivery. 

Target Circle 360 particularly attracts customers with free same-day delivery for select orders over $35 and as little as one-hour delivery on select items. Target executes this through its Shipt subsidiary.

We've seen this lightning-fast delivery speed only in snippets from Amazon, the king of delivery efficiency. Who better to take on Target, though, than Walmart, which is using a similar store-as-fulfillment-center model? 

"Walmart is stepping up to save our customers even more time with our latest delivery offering: Express On-Demand Early Morning Delivery," Walmart said in a statement, just a day after Target Circle 360 launched. "Starting at 6 a.m., earlier than ever before, customers can enjoy the convenience of On-Demand delivery."

Walmart  (WMT)  clearly sees consumers' desire for near-instant delivery, which obviously saves time and trips to the store. Rather than waiting a day for your order to show up, it might be on your doorstep when you wake up. 

Consumers also tend to spend more money when they shop online, and they remain stickier as paying annual members. So, to a growing number of retail giants, almost instant gratification like this seems like something worth striving for.

Related: Veteran fund manager picks favorite stocks for 2024

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