The Israeli start-up company AVO is laying off about 500 of its 750 employees worldwide

The start-up company AVO, which operates a grocery and consumer goods delivery service, is laying off about 500 of its 750 employees worldwide - about two-thirds of its workforce. In Israel, the company employed about 500 employees, of whom about 350 will be fired. In addition, the company completely stopped all shipping activities for private consumers, which was aimed at residential buildings and included about 1,000 buildings in Israel in cities such as Petah Tikva, Ramat Gan, Tel Aviv and Ashdod.
Now the company will focus only on activities with businesses - that is, deliveries to office buildings in Israel and abroad.
This is the most significant cutback in Israeli high-tech in recent times. It is taking place against the backdrop of the slowdown in the industry in recent months - and it indicates that, as expected, it is more difficult for companies to raise new capital rounds, especially if they are still burning money and the stability of their business model raises questions. These companies are inevitably forced to reduce their activities and also lay off employees. The cuts in AVO come in parallel with layoffs at overseas shipping companies, such as Go-Puff.
The company's last round of funding was $ 45 million led by Insight (-0.58% 74.96), and was announced in September 2021. Recently, the company tried to raise another large round of $ 100-70 million from new investors, but failed - and had to settle for a more modest investment from investors. Existing. "When you recruit a lot, you can streamline and reduce in a relaxed way. When you raise less money, you have to react quickly. It's very shaky. There's a polarity between the unfortunate incident - layoffs, this horrible thing I wanted to prevent - , Says the company's CEO, Dekel Welzer.
AVO was founded in 2017 by Dekel Welzer, who serves as CEO; Idan Hershko, VP of Customers; Nir Smadar, VP of Product; and Neri Blumen, VP of Operations. It raised a total of $ 84 million. One of its most prominent investors is the American venture capital fund Insight, one of the active funds in Israel, which has flowed a huge amount of money into Israeli high-tech in recent years. Alongside it, F2 Capital, Kleiner Perkins, IBI Tech Fund, Phoenix and JLL Spark have invested in the company.
The company operated a grocery and consumer goods delivery service, which focuses on "consumer concentrations": company employees and occupants of large residential buildings. She approached various bodies and offered them to open an online store for employees or tenants. Thus, consumers could order at home groceries like basic products, dairy products, diapers, baby products, cleaning, electronics, vegetables and fruits, household products, sports, pets and more.
AVO has operated in New York, Chicago and Israel, and has seen itself as an e-commerce retailer like Amazon or Walmart: it sets up logistics centers, where it receives goods from suppliers, packs them and ships them to its customer centers. It also competed with existing delivery services such as Shufersal (-0.6% 2805) or Volt, as well as many others in Israel and abroad. .
However, it is difficult to see how one can profit from such a model, as the company also bears the full costs of operation and shipping. The venture capital funds raised by AVO have so far subsidized the free shipments, out of a declared desire to expand and conquer as large a market share as possible, at the expense of older players in the market. The company believed that the business model, which focuses on "closed" communities rather than individual consumers, would yield savings in operating and marketing costs, differentiate them from other players and allow them to reach profitability even without charging shipping fees. The company has previously stated that it is "building an infrastructure that will enable it to reach profitability over the next two years."
Now it seems that the business model in front of the residential buildings was indeed not sustainable. Recently, the company has indeed started to consider charging postage precisely because of these issues. Finally, it was decided to close the activity completely. "Because your purchasing power is small, the profit per product is small. The idea was that losing money to grow is fine. With a more polished model it would be possible to make a profit," says Welzer.
"Before Corona our focus was on offices, but in Corona we focused on residential buildings, and we grew there quickly. We progressed to recruitment, it was supposed to be simple and there was good sentiment, but then we saw something happening in the world and there was also a cooling in grocery shipments. All internal investors said they would invest in the round.

The start-up company AVO, which operates a grocery and consumer goods delivery service, is laying off about 500 of its 750 employees worldwide - about two-thirds of its workforce. In Israel, the company employed about 500 employees, of whom about 350 will be fired.
In addition, the company completely stopped all shipping activities for private consumers, which was aimed at residential buildings and included about 1,000 buildings in Israel in cities such as Petah Tikva, Ramat Gan, Tel Aviv and Ashdod.
Now the company will focus only on activities with businesses - that is, deliveries to office buildings in Israel and abroad.
This is the most significant cutback in Israeli high-tech in recent times. It is taking place against the backdrop of the slowdown in the industry in recent months - and it indicates that, as expected, it is more difficult for companies to raise new capital rounds, especially if they are still burning money and the stability of their business model raises questions. These companies are inevitably forced to reduce their activities and also lay off employees. The cuts in AVO come in parallel with layoffs at overseas shipping companies, such as Go-Puff.
The company's last round of funding was $ 45 million led by Insight (-0.58% 74.96), and was announced in September 2021. Recently, the company tried to raise another large round of $ 100-70 million from new investors, but failed - and had to settle for a more modest investment from investors. Existing. "When you recruit a lot, you can streamline and reduce in a relaxed way. When you raise less money, you have to react quickly. It's very shaky. There's a polarity between the unfortunate incident - layoffs, this horrible thing I wanted to prevent - , Says the company's CEO, Dekel Welzer.
AVO was founded in 2017 by Dekel Welzer, who serves as CEO; Idan Hershko, VP of Customers; Nir Smadar, VP of Product; and Neri Blumen, VP of Operations. It raised a total of $ 84 million. One of its most prominent investors is the American venture capital fund Insight, one of the active funds in Israel, which has flowed a huge amount of money into Israeli high-tech in recent years. Alongside it, F2 Capital, Kleiner Perkins, IBI Tech Fund, Phoenix and JLL Spark have invested in the company.
The company operated a grocery and consumer goods delivery service, which focuses on "consumer concentrations": company employees and occupants of large residential buildings. She approached various bodies and offered them to open an online store for employees or tenants. Thus, consumers could order at home groceries like basic products, dairy products, diapers, baby products, cleaning, electronics, vegetables and fruits, household products, sports, pets and more.
AVO has operated in New York, Chicago and Israel, and has seen itself as an e-commerce retailer like Amazon or Walmart: it sets up logistics centers, where it receives goods from suppliers, packs them and ships them to its customer centers. It also competed with existing delivery services such as Shufersal (-0.6% 2805) or Volt, as well as many others in Israel and abroad. .
However, it is difficult to see how one can profit from such a model, as the company also bears the full costs of operation and shipping. The venture capital funds raised by AVO have so far subsidized the free shipments, out of a declared desire to expand and conquer as large a market share as possible, at the expense of older players in the market. The company believed that the business model, which focuses on "closed" communities rather than individual consumers, would yield savings in operating and marketing costs, differentiate them from other players and allow them to reach profitability even without charging shipping fees. The company has previously stated that it is "building an infrastructure that will enable it to reach profitability over the next two years."
Now it seems that the business model in front of the residential buildings was indeed not sustainable. Recently, the company has indeed started to consider charging postage precisely because of these issues. Finally, it was decided to close the activity completely. "Because your purchasing power is small, the profit per product is small. The idea was that losing money to grow is fine. With a more polished model it would be possible to make a profit," says Welzer.
"Before Corona our focus was on offices, but in Corona we focused on residential buildings, and we grew there quickly. We progressed to recruitment, it was supposed to be simple and there was good sentiment, but then we saw something happening in the world and there was also a cooling in grocery shipments. We debated last year and decided Wait. All domestic investors said they would invest in the round.]

Photo: Stefan Kalafko