UK delivery startup Deliveroo mulls pulling out of Spain as GoPuff raises US$1Bn in latest funding round

UK – UK delivery startup Deliveroo is considering ending services in Spain due to high costs associated with a recent requirement for food delivery companies to convert their couriers into staff workers. 

The company said in a statement that it had determined that achieving and sustaining a top-tier market position in Spain would require a disproportionate level of investment with highly uncertain long-term potential returns. 

This did not make economic sense to the company for a market that accounted for less than 2% of its overall transaction values in the first half of 2021. 
 
The London-listed company ranks fourth in a list of food-delivery firms with the biggest market share in Spain, below Uber Eats, Just Eat, and Glovo, according to a report by financial advising firm Fintonic in August last year. 

A spokesman for Deliveroo has however said Spain’s employment rights law was not the determining factor but added that it had resulted in an earlier withdrawal from the country. 

Spanish reforms have been seen as a direct challenge to the business models of companies such as Deliveroo, which rely on farming out delivery jobs to workers who are classified as independent contractors. 

Deliveroo says classifying its workers as independent contractors gives them the desired flexibility, but some workers have campaigned for rights such as sick pay and holiday. 

Deliveroo workers in the UK are still treated as contractors and in June the company successfully argued in the court of appeal that workers were self-employed, to the dismay of unions seeking to improve conditions in the gig economy.   

GoPuff achieves US$15Bn valuation 

Meanwhile, GoPuff, a US delivery startup with operations in more than 450 sites across North America and the UK, has raised US$1 billion in a funding round that included Guggenheim Investments, Hedosophia and SoftBank Vision Fund 1. 

According to Reuters, the funding has raised the startup’s valuation to US$15 billion, a near 69% jump from US$8.9 billion that the company was valued at, after its previous fundraising in March. 

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The startup, founded in 2013, delivers items like food, alcohol and medicines at a $1.95 flat delivery charge and recently partnered with Uber Technologies Inc to expand the delivery of essential items during the COVID-19 pandemic. 

 Since its last fundraising, Gopuff has announced several acquisitions including those of UK-based last-mile delivery platform Fancy and fleet management startup rideOS. 

 The company said it will use the latest funds to further expand into North America, the UK, and across Europe and for hiring and making investments in technology.

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