The two companies, which were both founded out of the Stockholm area in 2015, serve as the delivery and logistics partner for major brands, including multinational clothing retailer H&M, offering delivery services directly to people's homes as well as automated lockers in strategic locations.
Instabox operates in Sweden, Denmark, the Netherlands, Norway and Germany, while Budbee serves Sweden, Denmark, the Netherlands, Finland and Belgium.
Instabox had raised around $336 million since its inception, and recently hit a $1 billion valuation off the back of a fresh round of funding, while Budbee was recently valued at around $700 million, which is how the new combined entity arrived at its valuation of $1.7 billion. Moreover, when the merger is complete -- it still needs approval of the Swedish Competition Authority -- the company will be known as Instabee, with Budbee co-founder Fredrik Hamilton assuming the role of CEO and Instabox co-founder Alexis Priftis becoming executive chairman of the board.
Fredrik Hamilton & Alexis Priftis. Image Credits: Instabox & Budbee
Though the trajectories each company has taken since their foundations have been a little different, they have arrived in roughly the same place in terms of the types of services they offer and the markets they operate in. On top of that, in what has become an increasingly competitive industry in a turbulent economic landscape, we've seen a growing push toward consolidation and purse-string tightening, with the likes of U.S. grocery delivery giant Instacart recently slashing its valuation by almost 40% to around $24 billion, and closer to home Netherlands-based Just Eat Takeaway is scaling back in some markets and offloading its international ventures in pursuit of "more sustainable, profitable growth."
While Instabox and Budbee operate in a different market to these companies, the challenges remain the same -- and given how closely aligned they are in terms of history, product and markets, it makes sense that they come together rather than competing for the same dollars, both with each other and other established players and venture-backed newcomers.
"I have been long-term in my plans since the start, and this move is an amazing opportunity to create something truly substantial," Hamilton said in a statement. "I have of course followed Instabox closely during the years, and I’m impressed by their journey."
Priftis added that he saw this move as a "great fit between two companies that share a lot of common values."
Instabox and Budbee's founders, along with Swedish investment firm Kinnevik, will be Instabee's largest shareholders, along with previous backers which include H&M, EQT Ventures, Creades, Verdane and AMF, among others.