Milkrun to shut down, lays off all staff

Once one of Australia’s fastest-growing start-ups, the grocery delivery firm has now run out of cash and will axe some 400 workers.

Milkrun founder and CEO Dany Milham.

Online grocery delivery start-up Milkrun has made all staff redundant and will shut down by the end of the week, a move its chief executive and lead investor blame on deteriorating macroeconomic conditions.

As The Australian first reported, Milkrun axed 20 per cent of its workforce in February and on Tuesday CEO Dany Milham told staff in a letter that the company would close by the end of the week.

Milkrun had attempted and failed to raise fresh capital on multiple occasions in the past year, heaping pressure on the loss-making start-up to improve its financial situation.

“Hi team, I’m writing to let you know that we have made the difficult decision to wind down the business, and as a result, Milkrun will cease trading this Friday,” Mr Milham said in a letter to staff, seen by The Australian.

“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.

“Unfortunately, this means that all HQ, hub and rider roles will be made redundant. As everyone will be impacted, you will receive communication tomorrow with important information regarding next steps. If you have any questions, contact details will be provided in those emails, but please feel free to reach out to me directly if you need.”

Mr Milham said staff would receive their full statutory entitlements as well as extra payments and ongoing support including counselling and redeployment services.

“I understand this is difficult news to receive, and I’m sorry to have to deliver it,” he said.

“I’m so proud of the amazing business we have built and of the growth we have achieved. We set out to change the face of grocery delivery in Australia, while staying true to our values, people and culture, and we did that thanks to the passion, dedication, and hard work of so many of you, and you should be really proud of what we have achieved together.”

Milkrun rider Amy Farnsworth making delivery to Lauren Mason. Picture: Josie Hayden

The company had an estimated 400 employees after it shed 20 per cent of its staff in February.

Milkrun became one of Australia’s fastest growing start-ups last year when it raised a $75m Series A round led by major US fund Tiger Global Management, with participation from Sydney-based venture capital fund AirTree Ventures, as well as Skip Capital and Grok Ventures, the funds associated with Atlassian’s billionaire co-founders Scott Farquhar and Mike Cannon-Brookes.

In recent months, however, the company has been forced to abandon its promise of 10-minute deliveries amid mounting costs. It is the nation’s last remaining grocery delivery start-up following the closures of Send, Voly, Quicko.

Start-ups across the country have been forced to cut costs and lay-off staff in recent months as rising interest rates and deteriorating economic conditions put unprofitable companies under heavy pressure.

“Dany and the Milkrun team had an ambitious vision to up-end the grocery category with a relatable brand, online-first platform, and fast deliveries,” AirTree partner Jackie Vullinghs told The Australian.

“Milkrun quickly built a beloved brand and delightful customer experience that forced incumbents to invest in improving their offerings. We knew the business wouldn’t be profitable from day one and would require material scale to achieve profitability. As a seed-stage investment, we felt this risk was justified by the size of the upside.

“The economic environment shifted quickly, and so did the sentiment of growth investors. Despite great effort from the team to adjust, they were not able to find a path to break-even with the remaining funds available. Failure is a part of VC, and we will continue to back outlier founders at the earliest stages of their journey.”

Mr Milham as recently as February said his start-up had runway to survive at least 12 months, and that Milkrun had also doubled its average order value in the past year to more than $50.

The start-up was founded in 2021 by two former executives at online mattress retailer Koala, Mr Milham and Jeremy Dufner, who exited Milkrun after just seven months.

Milkrun last year held talks with Uber, Coles and Deliveroo about potential strategic partnerships, none of which eventuated.

Mr Milham told Nine Publishing last year that, within 10 years, Milkrun would be a bigger business than Coles or Woolworths. “I’m just so ambitious,” he said.