Collapsed company spent $11 million in 8 months

The Australian company went bankrupt risking 300 jobs and now a report has revealed what went wrong.

An Australian company that promised to deliver groceries in less than 10 minutes, which collapsed last month, has spent $11million in just eight months, a trustee report has revealed.

The start-up called Send was available in 46 Sydney and Melbourne suburbs and had 46,000 registered users, but went into liquidation at the end of May. endangering 300 jobs.

A creditor report from the directors of Send, Worrells, which was filed with the Australian Securities and Investments Commission (ASIC), showed that as the company’s sales soared, their costs also rose. .

Send’s sales topped $8,113 in October last year, but posted a loss of more than $658,000.

Fast forward to March and Send’s sales had skyrocketed more than 50 times to nearly $417,000 per month, but losses reached an astounding $2.38 million per month.

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The largest cost was staffing, which amounted to $5.5 million over eight months, administrators said.

“The large salary and wage expenses incurred are associated with the business model of the 10-minute grocery delivery business, as the business needed to employ a large number of employees in order to meet its business model,” the report said. .

“As a result, despite management’s attempts to reduce the losses incurred, it is clear that without external financing, the business model of the company was not sustainable.”

Send founder Rob Adams, believed to be a school dropout from Sydney’s northern beaches, blamed global factors for the company’s failure.

“There were a number of circumstances around the world that had made it fundamentally more difficult to raise the capital needed to scale the business, ranging from the war in Ukraine, to hardening global economies and intense scrutiny among investors. regarding the levels of capital intensity associated with the business model,” he told at the time.

Mr Adams hoped a buyer could be found to take over the business.

Worrells’ Matthew Kucianski said at the time of the crash that, like many tech start-ups, Send had a heavy cash burn that was being deployed to grow market share.

Send aimed to take a share of the $122 billion grocery market in Australia, but after its demise, there are now two major players left in the region.

Young Rich Lister Dany Milhan created grocery delivery startup Milkrun which alone raised $11m before its launch in September last year and $75m this year and is backed by Atlassian billionaires Mike Cannon-Brookes and Scott Farquhar.

He said Milkrun had reviewed Send’s financial information and had a significantly different business from his model.

The other startup is Voly, which was co-founded by Mark Heath and delivers to around 42 suburbs after raising $18 million in December 2021.

Experts have warned that start-ups could struggle to find funding, a crucial factor that Mr Adam blamed for Send’s bankruptcy, as supply chain problems, soaring inflation and the Rising interest rates make investors reluctant to throw money into high-risk ventures.

Patrick Coghlan, chief executive of credit reporting agency CreditorWatch, said start-ups often needed a huge injection of cash to help them grow and reach a level of profitability, but companies grocery delivery companies faced the added challenge of Australia’s sprawl.

“Australia (is a place) where you don’t have a huge density of people like you would have in, say, New York and other big cities around the world – you’re more spread out,” he said. -he declares.The Guardian.

“So how many of these companies can actually survive? Is this some sort of winner-takes-all scenario? »

Other start-ups have also had to make tough decisions lately, including staff reductions, due to the impact of global conditions.

5B Solar, an Australian company specializing in solar power projects, laid off 25% of its workforce two weeks ago.

He blamed supply chain and logistical disruptions caused by the pandemicas well as shortage of materials and a spike in prices partly attributable to the invasion of Ukraine.

Last month, buy now, pay later provider BizPay, which has offices in Sydney, was another company to make a heavy round of cups. It laid off 30% of its workforce blaming market conditions.

But it’s not just start-ups feeling the pinch of global conditions, with established players also facing headwinds.

Melbourne-based Envato, which runs a marketplace that offers access to things like photos, graphic design templates, audio and fonts, has been sacked 100 employees despite record profit after blaming economic factors such as inflation and Russia’s invasion of Ukraine.

Meanwhile, Australian investment firm Remi Capial collapsed late last month with a report from liquidators revealing its debt had fallen from around $70 million to a $124 million.

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