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Food-delivery startups Milkrun and Colab collapse into administration

Grocery and meal-delivery startups Milkrun and CoLab have abruptly collapsed, culling hundreds of jobs as administrators work to sell off their assets.

Milkrun founder, Dany Milham, informed staff in an email that the business will cease operations by the end of the week as “economic and capital market conditions have continued to deteriorate” forcing the company to shut down.

The Sydney-based grocery-delivery company grew popular during the Covid pandemic delivering around 2000 common grocery items across 35 suburbs in under 10 minutes or less using e-bikes or bicycles.

Last January, it raised $75 million in seed funding from investors setting plans to expand into Melbourne. However, with the return of in-store shopping, the business struggled to keep its operations afloat.

“We’ve always been committed to doing things the right way, and winding down the business while we still have a sufficient cash balance enables us to ensure our people and suppliers are paid in full,” Milham told the Australian Financial Review.

He added this decision will help the company pay severance packages to its staff and delivery drivers who will be made redundant.

Likewise, direct-to-consumer food platform CoLab has entered voluntary administration as “a new round of financing fell through”.

“We had a significant interest for the company to be acquired and decided to put the company into voluntary administration to help, but due to unforeseen events, our timelines became truncated,” co-founder and CEO of CoLab Josh Abulafia wrote in a LinkedIn post.

Colab was created in August last year after Colab Pantry was bought by Australian gourmet ready-meal delivery startup ChefPrep. At the time of the deal, ChefPrep co-founders Elle Curran and Josh Abulafia promised the merged venture would become the “Amazon for food” with next-day delivery across the country. It sold a range of ready-made meals, upmarket seasoning and sauces procured directly from 150 restaurants, brands and artisan food producers.

On Monday, the company appointed Morgan Kelly and David Kennedy of Ernst & Young as joint administrators who will oversee the “recapitalisation of the group” or the purchase of its business and assets.

“We want to focus on speed to help the staff find a new job and transition as quickly as possible. Elle Curran and I will provide a more comprehensive update and a reflection on our journey,” said Abulafia.

ChefPrep’s acquisition of Co-Lab Pantry was made possible by a successful $3 million seed funding round in April last year, led by led by Artesian Ventures and American VC firm Global Founders Capital.

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