Melbourne food delivery platform Providoor has entered liquidation, joining a rapidly growing list of tech startups around the country that have gone bust.
Launched by celebrity chef Shane Delia in April 2020, the food delivery service capitalised on pandemic restrictions and expanded to Sydney, Canberra and Brisbane.
In a statement on Friday, Mr Delia said the company would cease taking orders immediately, blaming "challenging economic conditions" facing the hospitality sector.
"We served more than one million meals and built something that made a difference during some very dark days," Mr Delia said.
"When people kept using Providoor after social restrictions were lifted, it showed us that it was a really good idea."
Providoor charged a 15 per cent commission to restaurants — half of the fee charged by industry giants such as UberEats and now-collapsed Deliveroo.
Liquidators RSM Partners said the closure of Providoor would directly impact approximately 50 restaurants in Sydney and Melbourne that used the delivery service and 16 full-time employees.
RSM Australia Partner Jonathan Colbran said customers who had already purchased gift cards or pre-purchased future meals using credit cards to immediately discuss their situation with their bank or financial institution to assess their options, as they may be eligible for a charge back.
"Based on our initial assessment of Providoor’s financial position, there is presently insufficient money to pay a dividend to creditors or provide refunds to customers, including gift card holders,’’ he said.
Tech startups face tough economic cycle
The news comes weeks after the collapse of delivery services CoLab and MilkRun, signalling volatile conditions in the tech sector.
Similar delivery-based businesses Deliveroo and YourGrocer collapsed at the end of 2022 in the face of soaring inflation and interest rates.
Melbourne Business School professor Hugh Williams said the impact of economic conditions had significantly impacted these kinds of businesses.
"Australians are really looking at the choices that they're making and are being more conservative in those choices," Professor Williams said.
"If you're selling a discretionary product like Providoor — high end meals from specialty restaurants — I think probably you're feeling the squeeze of inflation and higher interest rates."
Professor Williams said the issue with Providoor seemed purely economic as opposed to stemming from mismanagement.
"The CEO of Providoor was Tim McKinnon, who was the leader of eBay in Australia for a long time, he's a very experienced executive," he said.
"I don't think there's anything structurally wrong with a company like Providoor, I just think it's a very tough place to be right now in this part of the economic cycle if you haven't got the balance sheet."
Australian startup sector remains strong
While economic conditions continue to put strain on wallets, experts within the industry believe Australian tech startups will be able to weather the storm.
Paul Naphtali, co-founder of Melbourne-base tech fund rampersand, said Australia's startup sector remained strong.
"Australia is much better placed than many because of our general history of capital efficient companies that design and grow companies that can be very profitable once they reach a certain scale," he said.
Mr Naphtali said the closure of Providoor should not be an indictment on its owners.
"Shane [Delia] and Jason [Wyatt] his partner are fantastic entrepreneurs. Absolutely well-run company and so sometimes timing just works against you," he said.
"We must applaud those that are in the arena having a crack. We tend to try and pinpoint blame on an individual factor. And that's totally unfair."
Mr Naphtali said while the liquidation would be tough for staff and customers, failure was a natural part of the startup enviroment.
"One of the challenges in Australia because we've had a cycle where there's so much money, we haven't had much failure," he said
"The cultural acceptance of failure has meant some companies hang on too long, and that's not that helpful either."
