Troubles in Start-Up Land? Postmates Shuts Mexico City Office; Lays Off Workers
Postmates’ actions in Mexico City do not sit well with its $ 225 million fund raise in September.
According to a report in the New York Times, Postmates is shutting down its Mexico operations to focus on the US market. Reuters viewed a statement issued by Postmates to its clients.
“This wasn’t an easy decision for us as we’ve already dedicated two years to establishing ourselves and growing this market,” the company said in that statement. “Looking toward the future, we believe focusing on our sustained growth in major U.S. markets is what we should do.”
Postmates recently partnered with Walgreens to provide on-demand delivery in New York City.
CNBC said the delivery startup has laid off dozens of employees already in Mexico.
Competition in Mexico, high growth in the US
While Postmates has expanded well in the United States, it faces increasing competition in Mexico. In the U. S., its delivery service is accessible across 4200 cities to 80% of the country’s households. However, in Mexico, its rivals include Uber Eats, Colombian outfit Rappi and Spain’s SinDelantal. Chinese company DiDi has recently also made a foray in the country.
Contagion from other start-ups
The WeWork imbroglio and investors’ losses on Uber, Lyft and GrubHub have collectively become a party-pooper for start-ups looking to float a lucrative IPO. Postmates filed confidential IPO paperwork earlier this year.
However, like WeWork, the Postmates IPO is also perhaps consigned to the shelf, given the souring investor temperament.
“We had a window earlier in the year, but after [the] somewhat lukewarm reception of tech companies, specifically after WeWork and their losses, I think we’re ready to go when we feel that the market conditions are right,” cofounder and CEO Bastian Lehmann told CNBC last month.
Could Postmates be shopping itself?
The CNBC article also quoted one source who said that the company was in talks to find a possible buyer.
[Related Story: Softbank Having Second Thoughts About the WeWork IPO ]
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