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Rapid Delivery Apps in Los Angeles Are Facing a Reckoning
Samson Amore
Samson Amore is a reporter for dot.LA. He holds a degree in journalism from Emerson College. Send tips or pitches to samsonamore@dot.la and find him on Twitter @Samsonamore.
After a couple of years where pandemic lockdowns made lightning-fast, app-based delivery essential, the industry is facing a shakeout—and apps that promise delivery under 30 minutes are facing an existential crisis.
The so-called “dark store” model – which forgoes the traditional corner store for a sprawling warehouse that delivers through mobile apps – exploded during the pandemic. But many of those companies are now struggling to become profitable, largely because of rising overhead costs.
The Industry and the Challenges
At stake is a multi-billion industry aiming to deliver everything from groceries to convenience items and hot food, through bikes, cars, drones and even robots. Operating from a number of competing platforms, those companies saw sales more than double during the pandemic. Few experts see the industry disappearing entirely, but the sector is widely expected to shrink. The coming months and years will determine which model wins out.
Celia Van Wickel, senior director of digital commerce for analytics and brand consulting firm Kantar Group, told dot.LA she expects the bubble to burst—and soon, as venture firms become more discerning about their investments.
“Valuations are declining [and] money is not being forthcoming to rapid delivery companies,” Van Wickel said. Even as the economic climate becomes more challenging, some companies do have the chance to rise above the fray and gain market share – and satisfy investors – while others could be destined to go bust.
“[Investors] really want to see a profitable model, kind of akin to what we've seen in the dot-com era, where the bubble burst on ecommerce,” Van Wickel said. A lot of money was thrown into these new companies, they weren’t really profitable and then all of a sudden a lot of them collapsed.”
Some venture capital firms were “just investing to invest,” Van Wickel added, to see how the delivery market fared. She predicts they’ll soon become more judicious about who they fund. Burning cash without turning a profit isn’t going to be acceptable in the long term, she added.
Along with slackening consumer demand and less VC investment in the space, nearly every fast delivery company that relies on fulfillment centers, even Amazon, is going to face steep real estate, upkeep and staffing costs. Rapid delivery firms will need to spend big on real estate to operate fulfillment centers across cities that enable them to get to consumers fast.
Local startups Serve Robotics, URB-E, Kwibot and Duffl are trying to rise above the fray by delivering fast, to specific areas, with scooters or drones, but there’s no guarantee of success.
Image courtesy of Duffl.
Philadelphia-based GoPuff, one of the largest new rapid delivery services to enter in Los Angeles alongside DoorDash, Instacart and Uber (which also offer convenience delivery in addition to food) depends on having quick access to warehouses throughout the region. It bought liquor store chain BevMo in a bid to gain access to lucrative (and hard- to- get) liquor licenses and warehouses. It aims to save money by installing micro-fulfillment centers “within almost every” BevMo store that can service deliveries, its CEO told the L.A.Times. Still, it laid off 10% of its workforce in July after cutting about 3% in March, and shut 76 warehouses. GoPuff originally had plans to go public in mid-2022 at a $15 million valuation, but shelved them.
But GoPuff is not alone. Instacart cut its valuation forecast by 38% in March citing “poor market conditions,” and international rapid delivery startups like Gorillas, Getir and Zapp have also cut staff recently.
The layoffs suggest that rapid growth may no longer be enough.
“The GoPuff CEO basically said, ‘hey, we were getting a lot of investments by just showing top line incremental growth,’ they were growing customers and growing markets and that was okay enough for investors in 2021,” Van Wickel told dot.LA. “But now they're being pressured to really look at how their company is profitable [and] they're being asked to do this very quickly, or their investment will not be forthcoming.”
GoPuff pointed dot.LA to a recent shareholder letter that said it is “already driving 76% [year-over-year] sales growth for the core business.”
“GoPuff is the only company in this space that has proven it can be profitable at a city and regional level,” co-founders Yakir Gola and Rafael Ilishayev wrote. “We are now targeting full company profitability in 2024 while maintaining a strong cash balance throughout.”
An URB-E rider hauls deliveries in Santa Monica.
Image courtesy of URB-E
The Opportunity
Despite the headwinds, the rapid delivery industry “feels like it's here to stay,” said Alex Vasilkin, co-founder and CEO of Cartwheel, a Hollywood-based startup that makes delivery management software and recently raised a $3 million seed round in April.
“There’s all these dark kitchens opening, there are all these different startups popping up with drone delivery, and scooters delivery and hyperlocal, 15-minute delivery so I feel like there’s more options for customers and so far, we've seen it getting bigger and bigger,” Vasilkin said. Cartwheel works mainly with restaurants, but is looking to find “very big partners in mostly the alcohol space,” its co-founder Magdim Metshin told dot.LA.
The need for rapid delivery isn’t likely to disappear so long as people decide they need items fast and can’t make the trip themselves. The question is now “which companies can iron out their paths to profitability before they’re forced to go bankrupt?,” Van Wickel said.
“I think there's a balance between what the consumer wants and what behavior’s going to change,” she added. “To me, it's all about on-demand. So we're changing the model to an on-demand model… it’s changing the trip occasions out there from stocking up to more grab-and-go convenience models.”
Startups that seem poised to weather the storm are the ones that can control every aspect of the business – including supply, warehousing, distribution and, crucially, their apps. Usually, they’re seeking buyouts from larger companies that have existing infrastructure in place for this exact reason.
“I don’t think we have quite a winner yet; I think there’s [companies] that are more set up to win,” Van Wickel said, adding that it’s mostly “the companies that do have some cash on hand today to continue to iterate their business models.”
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Samson Amore
Samson Amore is a reporter for dot.LA. He holds a degree in journalism from Emerson College. Send tips or pitches to samsonamore@dot.la and find him on Twitter @Samsonamore.
https://twitter.com/samsonamore
samsonamore@dot.la
This LA Startup Wants to Make It Rain and Just Raised $25M to Do It
09:38 AM | May 09, 2025
🔦 Spotlight
Hello LA!
While most tech headlines are busy chasing AI chatbots and flying taxis, one startup in El Segundo is aiming a little higher. Literally.
Rainmaker just secured$25 million in Series A funding to expand its cloud-seeding drone technology. The round was led by Lowercarbon Capital, with participation from Starship Ventures, 1517 Fund, Long Journey Ventures, Naval Ravikant, and others.
Their idea is simple but urgent. Instead of relying on old-school aircraft to spray rain-making particles across the sky, Rainmaker uses AI-powered drones that find and seed clouds with pinpoint accuracy. It is faster, more affordable, and could reshape how regions fight back against droughts.
California's ongoing water struggles have made it clear that simply "saving" water is not enough. Cities and entire economies need new tools to create it. Rainmaker plans to use the funding to grow its fleet, invest in atmospheric science, and expand commercial partnerships with utilities and governments searching for solutions.
Bigger picture, Rainmaker is part of a growing shift in LA's tech ecosystem. While software remains dominant, more investors and founders are quietly betting on "hard tech" that addresses real-world problems like water, energy, and infrastructure.
It is not just about apps anymore. It is about survival tech.
With the skies getting hotter and the reservoirs getting lower, the next great tech export out of LA might not be entertainment or social media. It could be rain.
Stay tuned…
🤝 Venture Deals
LA Companies
- SimpleClosure, a Santa Monica-based startup that automates the business shutdown process, has raised a $15M Series A funding round led by TTV Capital. The company, which launched publicly in late 2023, helps startups and businesses navigate legal, regulatory, and compliance hurdles when closing down, using AI to streamline paperwork and communications. The new funding will support SimpleClosure’s platform growth and product expansion, as rising economic pressures create heightened demand for efficient dissolution solutions. - learn more
LA Venture Funds
- Alexandria Venture Investments participated in Haya Therapeutics’ $65M Series A funding round. Haya Therapeutics, which is developing precision RNA-guided medicines for chronic and age-related diseases, will use the capital to advance its lead therapeutic programs targeting heart failure and fibrosis. The company plans to expand its pipeline, invest in its discovery platform, and grow its team to accelerate clinical development. - learn more
- Griffin Gaming Partners led a $7M funding round for Fuse Games, a gaming studio focused on developing new original IP. Fuse Games, founded by industry veterans with experience at major gaming companies, plans to use the funds to accelerate production of its first title and expand its team as it builds ambitious new gaming experiences. - learn more
- Shamrock Capital has made a strategic growth investment in Neocol, a leading consulting platform that specializes in sales and AI-driven software solutions for subscription businesses. Neocol, which helps companies optimize revenue operations and digital transformations, plans to use the investment to accelerate its growth, expand its services, and further strengthen its leadership position in the Salesforce ecosystem. - learn more
- Trust Fund participated in a $7.2M seed funding round for Agree.com, an all-in-one platform that combines e-signature and integrated payments, aiming to streamline and speed up service agreements. The company plans to use the new capital to grow its engineering team, expand integrations, and enhance payment capabilities to help service providers close deals faster. - learn more
- Hyperlink Ventures participated in Orca AI’s $72.5M funding round. Orca AI, headquartered in London, develops AI-based navigation and collision-avoidance solutions to improve safety and efficiency for commercial shipping fleets. The funding will help Orca AI scale its autonomous shipping technologies, expand its team, and support global growth efforts. - learn more
LA Exits
- StoryFire, a social storytelling and video platform with over 2.5M users, has been acquired by Flashy Finance to launch a new platform called Flashy Social. The move aims to merge content creation with blockchain-powered financial tools, allowing creators to monetize through token incentives, streaming features, and community engagement. This acquisition supports Flashy Finance’s broader vision of building a cultural, creator-led financial ecosystem. - learn more
- Jaanuu, Inc., a Los Angeles-based medical apparel brand known for its stylish and functional scrubs, has been acquired in an asset sale by VentureOn Management, LLC. The acquisition includes substantially all of Jaanuu's assets, encompassing its intellectual property, inventory, and customer relationships. VentureOn Management plans to continue Jaanuu's operations, focusing on delivering high-quality medical apparel to healthcare professionals. - learn more
- Skechers has agreed to be acquired by 3G Capital in a deal valued at approximately $9.4 billion. Shareholders will receive either $63 per share in cash or $57 plus an equity unit in a new private parent company. Following the acquisition, Skechers will become privately held, maintain its Manhattan Beach headquarters, and continue to be led by its current management team. - learn more
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Wonder Ventures Launches $31 Million Fund Focused Exclusively on LA Startups
09:00 AM | January 13, 2022
Cameron Venti | Unsplash
After hitting the jackpot with hometown bets like shopping app Honey, Los Angeles venture capital firm Wonder Ventures is doubling down with a new early-stage fund focused exclusively on L.A. startups.
Santa Monica-based Wonder has raised $31 million for its new venture fund, founder and managing partner Dustin Rosen told dot.LA. The new fund is double the size of the $15 million pre-seed fund that Wonder raised in 2018, and like that one it will target fledgling L.A.-based startups that Rosen believes are too easily overlooked by larger VCs.
“The L.A. ecosystem is really mature as far as a place to build technology companies, and more capital than ever is coming into L.A. to fund our companies as they grow and scale toward an IPO,” Rosen said, noting that Wonder already deploys more than 90% of its capital in Southern California-based ventures. “We still believe that the earliest stage is underfunded—pre-traction and pre-seed. That stage is the hardest time to raise and get elite investors, and that explicitly is what Wonder does.”
Rosen pointed to an eclectic group of more than 60 L.A.-based founders and tech executives who have invested in its latest fund, including those from current and former Wonder portfolio companies like Clutter, Tala, and Honey. Other investors from local startup success stories like Snap, GoodRx, and Dollar Shave Club also pitched in.
Fom left to right: Valentina Rodriguez, senior investor; Dustin Rosen, managing partner; and Taylor Bolhack, head of platform and community for Wonder Ventures.
Courtesy of Wonder Ventures
Among the first companies to be funded by the new vehicle is RealAppeal, a Santa Monica-based startup that finds savings in homeowners’ property tax assessment bills through an appeals process. Rosen said he filed his own appeal on the company’s website as its founders made their pitch to him on the phone. “I hope to save thousands of dollars,” he noted.
Among Wonder’s most successful investments to date has been Honey, the ecommerce rewards app that PayPal acquired for $4 billion in 2019. The VC’s initial early-stage investment in the Arts District-based startup returned an exit worth more than Wonder’s entire $5 million first fund, according to Rosen.
The firm’s largest portfolio holding today is WhatNot, the Marina del Rey-based livestream auction marketplace that raised more than $220 million in venture capital last year on the way to reaching a unicorn valuation of $1.5 billion. That investment has proven even more lucrative than its bet on Honey; Rosen noted that the current value of Wonder’s stake in WhatNot is “worth more than the entire [$15 million] second fund.”
In addition to launching the new fund, Wonder has made two new hires to help oversee its portfolio of nearly 80 companies. Valentina Rodriguez, formerly an analyst and trader with Morgan Stanley, has joined the venture firm as a senior investor, while Taylor Bolhack, previously with Santa Monica-based micromobility operator Bird, has been named head of platform and community.
Wonder Ventures isn’t the only L.A-based VC firm targeting local seed and pre-seed startups. After five years with San Francisco-based Crosslink Capital, investor Joe Guzel has launched a fintech-focused early-stage fund with McLain Southworth called Haven Ventures, Guzel told the LA Venture podcast this week.
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Pat Maio
Pat Maio has held various reporting and editorial management positions over the past 25 years, having specialized in business and government reporting. He has held reporting jobs with the San Diego Union-Tribune, Orange County Register, Dow Jones News and other newspapers in Ohio, West Virginia, Maryland and Washington, D.C.
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