Its largest costs were employee wages. Send’s staff are its largest creditor.
The business is understood to have raised more than of $10 million, $3.1 million of which it banked in August last year in a seed funding round led by German fund Cherry Ventures and New York-based FJ Lab.
It is understood Send had been looking to raise another $5 million or so to give them enough runway to consider broader options of merger or sale, without having to be placed in administration.
Send founder Rob Adams said the company had been able to raise capital easily last year, but the situation changed dramatically in April.
“Growth requires burn, in which case the need to raise capital is substantial. There is definitely a widespread shift toward single-store profitability and positive unit economics at the moment, mostly inspired by global events,” he told The Australian Financial Review by e-mail.
“In hindsight, I would have tried to raise more capital earlier on. There was very little that could be faulted in terms of the efforts of the team and the execution. We made fairly limited resources with comparison to our peers go a very long way.
”It was truly a monumental effort from a team that punched well above their weight. The team should hold their heads high, despite not being our preferred outcome.”
Mr Adams blamed the war in Ukraine and the sell-off of tech stocks for making it a tougher environment to raise capital. But, as a founder, he said he had a strong appetite for risk and the experience had not deterred him from wanting to start another company.
“The experiences that we’ve had as a team are invaluable,” he said. “Many won’t experience what we have in their lifetimes. I will absolutely go on to start another company, equipped with what I have learned here.”
Efforts to salvage Send are understood to have been complicated by the need to pause the operations of the company, but talks are ongoing.
“The administrators are currently in dialogue with Send’s competitors as well as a larger supermarket chain,” Worrells principal Matthew Kucianski said.
Quicko, which shut its doors in mid-March, is also understood to have been trying to raise capital in the lead up to its closure.
Only weeks earlier it had spruiked its coverage of 75 per cent of Sydney’s suburbs, the closure of a small pre-seed funding round and plans for a brand launch.
The founder of rival produce delivery competitor Bundlfresh, Matthew Russell, said it was extremely challenging to make the economics of on-demand grocery businesses work when you own the inventory and promise such speedy delivery times.
Bundlfresh operates in Sydney’s Northern Beaches. Rather than owning the produce, it works with local butchers, bakers and delis to deliver their goods to shoppers the next day. The average dollar value of their transactions is approaching $200.
“These guys might have dark stores, but Woolies and Coles have their own existing network as a proxy, and they’re well-funded and motivated not to lose [market] share,” Mr Russell said.
“There’s a place in hyper convenience, replacing the cornerstone or petrol station, but then you’re in the crosshairs of DoorDash and Uber and all the other delivery platforms that can do it in a non-inventory way.
“It’s an expensive petri dish a lot of people are playing in.”
Mr Russell, who was formerly a warehouse and distribution director with Aldi and a group general manager at Green’s General Foods, said the on-demand players were also constrained by the need to exist in highly urbanized settings to meet their 10-minute targets.
Eventually, he believed the remaining players would need to either charge more for their goods and services, or extend delivery times.
“These guys will be squeezed on every front,” he said. “It’s happening on labour, on industrial rental prices, and also on inputs if you own the inventory [thanks to price inflation].”
But, he was confident there would be players interested in acquiring the assets of Send.
“Send’s mailing list, subscribers and customers with the app are valuable for anyone in the space,” he said.
“And then there’s the lease holdings … It’s not just a tight labor market, but the commercial property market is quite tight as well.”