Milkrun closure a “setback” for Australian e-bike startup Zoomo, but the pedals are still turning

The closure of instant delivery pioneer Milkrun poses a “setback” to Zoomo, the electric bike startup which outfitted the business, but senior leadership says Milkrun’s demise won’t compromise the Sydney-based firm.

Milkrun founder Dany Milham on Tuesday announced the business’ imminent closure and the redundancy of approximately 400 staff, saying rapidly changing economic and capital market conditions contributed to the decision.

The closure comes roughly 15 months after Milkrun entered the Australian market, promising 10-minute grocery deliveries across inner Sydney, and the backing of $75 million in venture capital.

Delivery staff at Milkrun’s neighbourhood hubs used bikes provided by Zoomo, the Australian firm which provides electric bikes (e-bikes), scooters, and light vehicles to riders and businesses in the delivery sector.

After four stages and over 600 riders taking part, the Tour de MILK ended last week with an epic finale ride. Big shout out to our winning Riders (1st Billy T, 2nd Miguel, 3rd Alec) who took home their very own @ridezoomo e-bike. See you all next year! #MILKRUN #ebikes #letour pic.twitter.com/h3YBnYaAnK

— Riders of MILKRUN (@RidersofMILKRUN) September 15, 2022

Originally founded in 2017 by former Deliveroo executives Mina Nada and Michael Johnson, Zoomo positions its e-bikes as an environmentally-friendly option for new delivery startups.

To date, it has amassed more than US$100 million (AU$149 million) in funding in both debt and equity.

Its financial backers include Skip Capital, the VC fund of Kim Jackson and her husband Scott Farquhar, and AirTree Ventures, both of which also dipped funds into Milkrun itself.

Individual riders can lease its e-bikes for $39 a week, with Zoomo offering variable business leasing prices.

The precise number and cost of Zoomo e-bikes currently operated by Milkrun is not immediately clear, but SmartCompany understands they are prevalent across the company’s remaining neighbourhood hubs.

In his statement, Milham said Milkrun maintains enough cash on hand to pay its suppliers.

Responding to the loss of Milkrun as a major client, Siddharth Shankar, Zoomo’s general manager for Australia, said the company will withstand the unfortunate event and has begun expanding its customer base.

“We are saddened to hear about Milkrun’s closure this week,” Shankar told SmartCompany.

“While the loss of a customer as promising as Milkrun is clearly a setback, ultimately Zoomo has a diverse customer base and no single customer dependency.”

Zoomo — which has already observed the collapse of Milkrun competitors Send, Quicko, and Voly in the Australian market — has been “working to de-risk ourselves in the instance something like this occurred,” Shankar continued.

E-bikes used by some collapsed ventures have already been repurposed for other organisations, he added.

“Many of the Zoomo bikes previously allocated to instant grocery companies like Milkrun, have already been redeployed to other segments within Zoomo, including independent couriers delivering for the likes of Uber and Doordash, as well as other progressive companies transitioning their fleets to sustainable solutions across parcel delivery, tourism and other commercial use cases.”

Milkrun declined to comment.