Food delivery giant Doordash has pulled out of talks with fast-growing German grocery start-up Gorillas as the US takeaway company eyes up its options for a European launch.
The New York-listed company had been in negotiations over a $400m investment into Gorillas, which has expanded rapidly across Europe including into the UK, but the deal collapsed in recent days, three sources confirmed.
The deal would have valued Gorillas at a reported $2.5bn – far lower than its planned $6bn valuation the start-up had been seeking earlier this year.
The Telegraph understands a letter of intent had been signed between the parties, but Doordash tore it up after Gorillas attempted to find another backer at a higher valuation.
Doordash declined to comment. A Gorillas spokesman said it did not comment on speculation.
Gorillas is among the best-known players in the fast-growing 10-minute grocery delivery sector, expanding into the UK, with its marketing appearing across London buses, and has recently launched in the US.
Gorillas and about a dozen similar start-ups use delivery-only “dark stores” to make rapid deliveries of groceries and essentials using couriers.
However, the grocery player has come under scrutiny, facing protests from riders over their working conditions in Germany. Upstarts including Gorillas have burned through venture capital funding in a race to dominate the nascent market.
More established rivals, such as Deliveroo, have not opened “dark store” services, instead working with supermarkets for small deliveries.
Doordash, which listed in December, has been eyeing a European launch and has started hiring dozens of employees to bring its food delivery business to Germany.
There is speculation that Doordash could soon bring its app, which rivals the likes of Deliveroo and Uber Eats, to the UK. An investment in Gorillas would have been its largest in a rival firm.
"Dark stores" have attracted billions of dollars into start-ups, with Gorillas raising $290m alone despite being founded only last year.
Investors say the number of start-ups is unsustainable and predict some could collapse or be snapped up by rivals.