Israeli grocery delivery startup Avo lays off 500

Dekel Valtzer Credit: Stefan Klefko
Dekel Valtzer Credit: Stefan Klefko

After failing to raise $70-100 million, the company is laying off two thirds of its work force, including 350 employees in Israel.

Israeli grocery deliveries platform Avo is laying off 500 of its 750 employees worldwide including 350 in Israel. At its peak Avo had more than 800 employees.

Avo was founded in 2018 by CEO Dekel Valtzer , Idan Hershko, Nir Smadar and Neri Bluman. The company has developed a platform for delivering groceries from the store to the consumer. Avo has raised $84 million to date from Insight Partners, IBI Tech, Kleiner Perkins, F2 Capital and others.

Valtzer told "Globes" that the company originally focused on deliveries of grocery products to workers in large office buildings through signed agreements with the buildings management. But following the outbreak of the Covid pandemic and the shift to working from home, Avo extended its business model to deliver groceries to large apartment buildings, university campuses and other large institutions and the company expanded its workforce.

But after finding that its operations in New York are not profitable, Avo in consultation with its investors, has decided to return to its original model of supplying to office buildings and is thus reducing its workforce.

According to Valtzer, delivery operations to apartments in Israel are approaching profitability but the company decided to discontinue the activity as part of its policy of returning to focusing on the business sector and Avo is seeking a buyer for this activity, who would also take on the employees.

Valtzer said that the company had planned to raise $70-100 million from investors but had been unable to do so on the terms that it had sought due to the change in market sentiment after last year's record startup fund raising. Consequently the company embarked on a smaller internal financing round from existing investors although Valtzer declined to disclose the amount raised.

The current layoffs will hit employees in operations management (pickup, drivers, customer service) as well as head office staff.

Valtzer said, "Covid and working from home forced us to move quickly from our original vertical of offices. When the offices returned to work, we did not know how to swallow both areas together. I think that there is a lot of potential in the field of home deliveries but I couldn't bury my head in the sand regarding the change in market conditions and endanger hundreds of employees."

To some extent what is happening at Avo is part of the overall shrinking of the deliveries market in the post-Covid era after it peaked during the lockdowns. Take for example US food delivery company GoPuff, which last month fired 35 of its workforce.

Valtzer insists that there is a difference between Avo and many other companies in the sector. "I live in New York where there are at least six apps that will deliver a can of coke to your home within 10 minutes. It is clear that these models cannot continue working and this market in which companies like Instacart, DoorDash and others operate is shrinking. But our model is different and can be efficient and profitable, it just takes time to get there."

Published by Globes, Israel business news - - on May 1, 2022.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.

Dekel Valtzer Credit: Stefan Klefko
Dekel Valtzer Credit: Stefan Klefko
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