Online grocery delivery, a booming business at the height of the Covid-19 pandemic, has definitely come down to earth with the shifts in the economy, public health and technology investing. Oda, one of the bigger players in online grocery delivery in Europe with operations in its home market of Norway as well as Finland and Germany, today announced that it had raised 1.5 billion Norwegian crowns in equity (about $151 million at today’s rates) — a big round, but executed under tough conditions.

The investment gives Oda a post-money valuation of NOK3.5 billion, or $353 million. This represents a big devaluation for the company, which says it is profitable in some (but not all) of its markets. In April 2021, Oda (known then as Kolonial) was valued at around $900 million when it raised $265 million from investors that included SoftBank’s Vision Fund.

SoftBank — one of the most prolific investors in the last several years fueled by its mega-capitalized Vision Funds — has been hit hard by the crunch in the tech world. Last month, it noted that it lost an eye-watering $7.2 billion due to write-downs on the valuations of a number of its technology investments. It still lists Oda among its portfolio companies on its site (as part of Vision Fund 2), although it’s not noted as an investor in Oda’s newest financing.

In addition to the equity investment from Kinnevik, Verdane and Summa Equity, Oda said that this latest round included existing backers Rasmussen Group, Prosus and Kinnevik contributing a further NOK621 million ($62.5 million) in equity through debt conversion.

To give some balance to Oda’s picture, things are not all dark. The company — which has been in business since 2013 and thus is one of the more seasoned players in the space with other notable, regional names in Europe including Ocado out of the U.K., Rohlik in the Czech Republic, Picnic in the Netherlands, and Everli in Italy — says that its Norway operations are profitable.

“In 2021, we made an operating profit of NOK 29 million in Norway, a concrete proof that our business model works,” said Kristin Thornes Woldsdal, managing director for Oda in Norway, in a statement. “The company has very satisfied customers who benefit from a wide range of products at low prices, delivered directly to their homes.” It notes that in recent months, it’s seen a growth in its business with sales up in its home market by 15-20% compared to the same period last year.

That’s been on the back of a lot of margin attrition though at a time when food prices are generally going up across Europe. “Last year we reduced our sales prices to fully match competitors in the discount market, which has resulted in a positive effect on sales,” she added.

Oda says that its focus now will be on getting profitable in Germany and Finland for expanding elsewhere.

Oda’s funding underscores some of the major challenges underfoot for the online grocery sector at the moment. During the peak of the Covid-19 pandemic, many online grocers came into their own as consumers turned away from shopping in person to reduce social contact.

That led to the rise of a number of different permutations in the online grocery model, including a profusion of “quick-commerce” companies, delivering a smaller section of essentials and indulgent treats in under an hour, as well as a number of more standard grocery propositions aimed at households and replacing their weekly trips to the supermarket. This also saw other kinds of players, like restaurant delivery platforms, move into the grocery space.

However, in more recent times, not only have consumers returned to physical stores, but in many cases, they are facing economic pressures of their own, and for many, paying a premium to have goods delivered to their doors, even if it saves busy people time, has not proven to have a lasting enough pull to sustain the number of companies out there trying to make a business from it.

Many of the quick commerce players have been the first to feel the impact, with the likes GoPuff, Getir, Jokr, and more all laying off workers and pulling out of markets where they’re facing too many costs and too little return.

But as Oda’s devaluation — and other developments, like Instacart’s layoffs — underscore, the restructuring and rationalizing is not limited to the quick-commerce upstarts.

Investors still see an opportunity, though, not least with players who have been around for longer than the latest grocery boom (and now bust).

“We are impressed by how Oda has reinvented grocery shopping. The company has developed a world-class logistics and distribution system, which makes online grocery profitable and sustainable,” said Martin Gjølme and Staffan Mörndal, of Summa Equity and Verdane, in a joint statement. “Customers that place orders through Oda reduce co2 emissions significantly and cut food waste by about a quarter when compared to shopping at a physical store. We are investing in Oda because we see great potential in its business and want to contribute to its continued growth.”

More to come.

Oda, the Norwegian grocery delivery startup, raises a fresh $151M, but at a lowered valuation of $353M by Ingrid Lunden originally published on TechCrunch