“Since we announced our structural changes in February, economic and capital market conditions have continued to deteriorate, and while the business has continued to perform well, we feel strongly that this is the right decision in the current environment.”
Mr Milham – who was one of the co-founders of online mattress company Koala – said MilkRun would have enough cash to pay all suppliers, plus give employees and riders severance packages. The start-up employs more than 400 staff – including riders – who will be made redundant.
“We’ve always been committed to doing things the right way, and winding down the business while we still have a sufficient cash balance enables us to ensure our people and suppliers are paid in full,” Mr Milham said.
MilkRun launched in Sydney in 2021; creating a network of warehouses dubbed dark stores, which stock up grocery products and enable delivery riders on e-bikes to get groceries to customers in 20 minutes or less. Customers ordered through a mobile app.
The so-called last mile grocery model was pioneered by the likes of Getir in Turkey and GoPuff in the United States, where those companies raised hundreds of millions of dollars from VC firms while interest rates were low.
In Australia, Mr Milham’s MilkRun caught the attention of global venture capital firms with the same model. Tiger Global Management led a $75 million fundraising round for MilkRun early last year, bringing its total venture capital raised to $86 million.