As a unicorn, TakeAway.com still has a tough battle ahead

It is very likely that the Dutch startup-scene will have a new unicorn to look up to. If the IPO of TakeAway.com goes as planned, the food delivery startup will be valued at around 1 billion euro. This certainly is an incredible achievement, but the company can’t sit back and relax yet: there’s possibly tough times ahead.

Joining the 1 billion euro-club

Tomorrow, September 30th, CEO and founder Jitse Groen will take his business of 16 years public. Last week shares were to be sold at an indicative price range between €20,5 and €26. Today the price range has been adjusted to a less wide, but also slightly lower, €21,50 and €23 euro per share according to press agency Bloomberg. According to the agency there is enough demand for shares of the startup, which could end up at a valuation of over 1 billion euro’s.

Rapid growth, big loss

That firmly cements TakeAway.com’s position as an important, unavoidable force in the food delivery market, but there are certainly tough times ahead. The startup has been expanding rapidly, resulting in some impressive growth. Revenue was up 58% last year and there are no signs of slowing down. It is however good to know that the company hasn’t made a single euro in profit yet. Net loss over the first half of 2016 is estimated at €11.5 million.

No number 2

This loss is due to the rapid growth ambitions of the company. Expanding the userbase is important for the survival, but does not come for free. TakeAway.com’s Dutch brand Thuisbezorgd.nl has a comfortable position as marketleader with over 90 percent of the market firmly in hand. The closest competitor was JustEat.com. ‘Was’, because not long ago TakeAway.com gobbled up this competitor for a mere €22.5 million. Not a lot of money for the nearest competitor in the fast growing market of food delivery.

All or nothing

This does point at one of the biggest challenges for TakeAway. As analyst Roel Gooskens mentions in a critical article after reading the prospectus: “This shows how limited the market value is for number 2 position.” If you’re not number one, you’re basically nowhere, and Dutch newspaper NRC also draws the same conclusion: “A lot of online markets are everything or nothing. The winner becomes a quasi-monopolist.” This is important for TakeAway.com, as they are still battling for supremacy in the very large, important German Market. The German company Delivery Hero, owner of Foodora, is the number one there. It has the network, the clients and the deep pockets of Rocket Internet supporting them. TakeAway.com can’t afford to settle for a second place making ongoing investments necessary. According to NRC Takeaway spends €2,68 for every foodorder placed on their platform. In The Netherlands, this is only €0,48 for every order.

Uphill battle

So there’s no surprise why TakeAway needs the €175 million they aim to obtain through the IPO. They took the step to the German market, so now they need the ongoing investments to not disappear in obscurity. Even though the IPO will make the short list of Dutch unicorns slightly longer, there still is an uphill battle for TakeAway.