“[Co-founders] Mark and Thibault had been very open with us the previous Friday,” the staff member said. “They said, ‘the changing startup landscape is making fundraising difficult, we’re meeting with investors on Tuesday, we’ll let you know how it goes.’ And then on Wednesday, we were all released.

The staffer said he was aware that startups could quickly turn south, but was “disappointed” because the two founders of Voly had previously said the company had enough cash to last until next February. The couple were good people, “super inspirational” and had assembled a talented and collegial team but needed mentorship, the source said.

Store managers didn’t get as much notice, the staff member said, with one leaving scathing comments on an online review site.

Of three companies launched last year hoping to take over the Australian grocery market, Send collapsed and Voly made deep cuts. Milkrun founder Dany Milham declined to comment.Credit:Composer: Monique Westerman

The company’s Crows Nest, Manly, Maroubra and Alexandria warehouses have closed, the former staffer said, leaving just three or four stores in the city and surrounding suburbs, while a planned expansion in Melbourne appears to have been abandoned. Delivery times have been extended up to 20 minutes, but Voly is still working.

Its larger and better-funded rival Milkrun is run by serial entrepreneur Dany Milham, who did not respond to requests for comment. In a Australian Financial Review article published last month that called Milkrun an “overnight success”, Milham insisted his company would be bigger than Coles in a decade and said it had better margins than people assumed because of its efficient staff and product range.

Elsewhere, Milham dismissed comparisons with other companies in the sector, and there are those in the industry who believe Milkrun could benefit from thinning out its competition. Send, the third startup to enter the market last year, collapsed in early May. He had tried to sell himself to Milkrun and Voly before failing, sources said.

Milkrun founder Dany Milham thought his new venture would grow much faster than his previous startup, mattress and homeware company Koala.

Milkrun founder Dany Milham thought his new venture would grow much faster than his previous startup, mattress and homeware company Koala.Credit:Josh Robenstone

It’s not uncommon for startups to collapse, which the industry sees as a price to pay for ambitious people trying to create value for investors, new jobs and new customer experiences. Many venture capitalists have already said The Sydney Morning Herald and age they still have funds to invest in good companies.

But industry insiders have long been skeptical of the long-term profitability of any local player in the instant grocery delivery business, which lures customers with cheap prices and lightning-fast service.

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Indeed, startups have faced high rental costs by placing stores in dense urban areas, guaranteeing staff the full industry minimum wage unlike competing delivery services such as Uber and DoorDash, and lacking the economies of scale enjoyed by supermarket giants such as Coles, Woolworths and Aldi. .

A European company called Gorillas, which has served as a model for local startups, has downsized and scaled back expansion plans as it holds secret talks with rivals over a sale or merger, according to a recent Bloomberg report. Last year, the company raised nearly $1 billion at a valuation of around $3 billion, but is now struggling to raise funds as investors begin to doubt the sector’s profitability. US rival Gopuff also laid off hundreds of staff earlier this year.

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