Liquor-delivery startup Drizly laps up $15m in new funding
Ordering booze with your smartphone sounds like a bit of frivolous fun. But big e-commerce companies and deep-pocketed investors are betting that it’ll become a serious business.
Boston-based Drizly, developer of a mobile app that connects liquor stores with home-delivery customers, said Thursday it has raised $15 million from private investors. To date, the startup has raised nearly $33 million.
Drizly’s software attempts to modernize a phone-and-fax delivery system that liquor stores in Boston and other markets have relied on for years. Its consumer smartphone app routes orders to a local store, letting customers choose from available inventory. It also helps route drivers to the drop-off point and passes the payment on to the store.
Drizly charges retailers software licensing fees, which can range from of hundreds to tens of thousands of dollars per month. It also makes money from advertising. Drizly doesn’t mark up the liquor prices or take a cut of sales, although customers may pay delivery charges.
The new investor money could help Drizly keep pace with a slew of competitors from the grocery and general retail sectors, as well as other small companies that specialize in alcohol sales.
Amazon offers alcohol deliveries in some cities, including Seattle, New York, and Minneapolis, through its one-hour Prime Now grocery-and-food-delivery service. Instacart, a privately held tech company that provides delivery service for grocery chains like Whole Foods, has also added liquor-store deliveries in Boston and other markets.
Drizly is one of the better-financed startups to focus specifically on shipping or delivering alcoholic beverages, according to research from data provider CB Insights.
Winc, a Los Angeles-based online wine seller, tops that list in the United States with about $42 million raised from investors. Drizly has raised the second-largest total, while Saucey, Drync, and Minibar are much further behind, having raised less than $5 million each.
“It’s a big market, and there’s a lot of people that want to go after that pie — especially Amazon,” Drizly chief executive Nick Rellas said. “I will say, while it feels like it’s more crowded than ever . . . competition from smaller companies is starting to go away.”
Rellas said Drizly could have raised even more money from investors but choose not to; revenues are strong enough, he added, to help fund its expansion.
“This is the right number for us given the climate. It allows us to make the investments we want to make, without having to give away more of the company than we want to,” Rellas said.
Drizly has expanded its footprint in the past year, now reaching 23 markets in the United States and Canada. It also broadened its product offerings this spring, adding a special-order option that lets customers search for harder-to-find bottles in addition to ordering same-day deliveries from the stock on hand in a local store.
Drizly now has about 60 employees, most at its Boston headquarters. The latest investment was led by Polaris Partners, joined by Fairhaven Capital and Suffolk Equity Partners.
Suffolk Equity general partner Freddie Martignetti said Drizly’s advantage comes from the time its founders worked as liquor-store delivery drivers, giving them credibility in an old-school industry.
Martignetti knows something about that business himself — his family owns Martignetti Cos., a major wine and spirits distributor in the region.
“It’s hard to understand, and it takes an appreciation and a certain level of patience,” Martignetti said. “That’s what Drizly has done so well: They have pushed the industry to innovate while working hand-in-hand with the players that populate the industry already.”