Bengaluru-based milk delivery startup Doodhwala, backed by venture capital firm Omnivore Ventures has pulled the plug on its delivery operations across three operational cities including Bengaluru, Hyderabad, and Pune, according to an email sent to customers on Monday.
The company’s chief executive officer Ebrahim Akbari announced in the email that its bigger rival Freshtohome will now take over their delivery operations. Freshtohome has raised over $30 million till date from multiple investors, and currently operates in 8 cities in India, and in the Middle East.
Doodhwala, which is owned and operated by Banger Tech Pvt. Ltd., had last raised $2.2 million last February from impact investor Omnivore Partners. A Techcircle report from November 2018 said that Doodhwala was in talks with existing and new investors to raise up to $12 million in its Series A round, at a post-money valuation of around $40 million.
However, almost 10 months after the funding talks, the company has decided to handover delivery operations to a Bengaluru-based online fresh meat retailer Freshtohome, which had last raised $20 million in a Series B round in August from Iron Pillar and Japanese investor Joe Hirao.
“…We regret to inform you that we will be discontinuing our services due to unforeseen circumstances. However…we’ll make sure your daily essentials still reach your doorstep…, thanks to FTH (FreshToHome) Daily," Akbari said in his email addressing customers.
Akbari was not immediately available for comment when Mint contacted him through calls and texts.
Freshtohome chief executive Shan Kadavil told Mint that the company has not acquired Doodhwala, instead “(we) just provided a migration path for their customers since they (Doodhwala) were having some challenges with the business".
Doodhwala was founded in 2015 by Aakash Agarwal and Akbari as a subscription-based grocery delivery service, which mainly depended on early morning milk delivers as a method to hook in repeat customers. It offered categories such as baked items, meat, fruits & vegetables, staples, personal care products, among others.
Doodhwala competes with other funded subscription-based milk-delivery startups like Milkbasket, backed by Unilever Ventures and Sachin Bansal, as well as Dailyinja, backed by Sequoia, Matrix Partners, and Saama Capital. Apart from this, grocery e-tailing giant Bigbasket had also forayed into subscription-based delivery services via its 'BB daily' brand which was launched in early 2018.
Although hyperlocal delivery firms largely operate on small margins and a fragmented supply base, the segment recently a slew of new delivery startups focused on milk deliveries. Several dozen startups in the space have raised venture capital funds, and some even consolidated with bigger players in the market.
Bigbasket had acquired a smaller grocery and milk delivery startup called Raincan in October 2018 to supplement its BBDaily product. Food delivery startup Swiggy also made its way into hyperlocal deliveries by acquiring subscription-based grocery delivery platform Supr Daily last year.