Milkrun, a swift delivery startup that raised $86 million over the past two years, is closing its operations after 18 months, resulting in over 400 staff redundancies. Co-founder Dany Milham sent an email to the employees after Easter break stating that the company has taken the “difficult decision to wind down the business,” and as a result, Milkrun would stop trading by Friday.

Last year, several fast delivery services like Voly, Send and Deliveroo, failed or left the market, leaving Milkrun as the last one standing. Just seven weeks ago, the company cut 20% of its staff with Milham indicating that the business would have enough runway for 12 months, and all hubs would be profitable or break-even after those most recent cutbacks. However, amid rising interest rates and cost of living pressures, consumers have cut back on discretionary spending, leading to Milkrun’s downfall.

“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,” Milham said in an email to staff.

Milkrun started its 10-minute delivery service in Sydney in September 2021, raising A$11 million in June that year. In early 2022, it raised $75 million from Tiger Global in a Series A and was looking to raise again in the second half of 2022, to no avail. It serviced around 80 suburbs in Melbourne and Sydney. The venture will close with enough cash in the bank to pay suppliers and redundancy packages to the company’s 400-plus employees, including delivery riders.

While it appeared that the company was flush with cash, generating around $4 million in monthly revenue a year ago, by February of this year, the average order value had doubled to more than $50. The bigger issue for Milkrun was that the sector lacked any real barriers to entry, so traditional players such as Woolworths and Coles, with substantial financial resources, could quickly mimic and match the offering.

Woolworths launched Metro60 offering delivery on 50 popular items in under an hour in June last year, backed by US tech giant Uber. A crowded market was already losing challengers, with Send collapsing in May 2022, after it failed to find investors for $15 million at a $50 million valuation. Sydney-based rival Voly halved its workforce and closed warehouses the following month. It launched in July 2021, raised $18 million in a Seed round led by Sequoia Capital India alongside Global Founders Capital and Australian-based Artesian Capital in December 2020.m By November Voly was also gone after also failing to find investors.

Creditors owed $17.7 million received between 15 cents and 27c in the $1. Deliveroo, the UK’s global food delivery giant, withdrew from Australia in late last year after losing $33 million. In January, the Milkrun founder denied claims that Milkrun’s investors, including Airtree, were looking for a buyer or strategic partner for the business, first published in The Australian.

“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,” Milham said. AirTree partner Jackie Vullinghs mentioned that the sentiment of growth investors shifted along with the economic environment shifted alongside the company being unable “to find a path to breakeven with the remaining funds available.” Nonetheless, the business “forced incumbents to invest” in response.

“While it is unfortunate that Milkrun has closed down, failure is a part of venture capital (VC), and we will continue to back outlier founders at the earliest stages of their journey.”