In an early sign that M&A activity is about to ramp up in the startup sector to help companies survive, Sydney-based courier service Drive Yello has merged with café payment platform Hey You.
Known as 4You Innovation, the merged entity hopes to hit the market for more cash in the new year, seeking up to $15 million.
Drive Yello last raised $1.5 million in a Series A from Tidal Ventures in 2018, raising a total of $7.7 million in venture funding since launching in 2014. Hey You started in 2012 as Beat the Q before becoming merged with Posse and E-Coffee Card in 2014, then rebranded in 2015 after raising $5 million. Most recently $2 million in a Series B in 2016 and counts Reinventure, Artesian, the Scaleup Mediafund and Alium Capital among its backers.
Hey You founder Adam Theobald went on to found Ordermentum, which raised $6.2 million in July this year.
Drive Yello founder Steve Fanale will lead 4You Innovation along with co-CEO Asheesh Chack. The leadership teams of both companies will remain with the group.
Fanale said the new company believes it can hit $100 million in revenue in FY23, with its courier business growing at an average annual rate of 150% over the past two years, with clients including Woolworths, Endeavor Drinks and Coles. The merger will give them 5,000 active suppliers, 5,500 couriers, 10 million orders and 100,000 active customers.
“By merging Drive Yello and Hey You into one powerhouse, we are providing retailers with a single local e-commerce experience that delivers the best technology, services and products,” he said.
“This will help retailers meet consumer expectations.”
Hey You chairman Peter Hammond said the merger “makes absolute sense” because of the “many synergies” between the payment app’s business model and Drive Yello.
“Bringing our teams together will allow us to develop new services for our established customer base and expand our overall addressable market.”
Drive Yello’s merger with Hey You follows the departure of food delivery company Deliveroo from the Australian market last month. Burn through $18 million in VC funding; and Send will be under voluntary governance in May.
Last week, Menulog, the Australian subsidiary of Anglo-Dutch delivery giant Just Eat Takeaway.com, cut local jobs as part of a global workforce reduction.