The dream is over for rapid delivery startup Milkrun, which shuts down this week after 19 months of operations, having raised $86 million in the last two years.

Cofounder Dany Milham emailed staff after the Easter break to say “we have made the difficult decision to wind down the business, and as a result, MilkRun will cease trading this Friday”.

More than 400 people have been made redundant.

Milkrun was the last fast delivery service left standing after several failed, or left town last year, including Voly, Send, and Deliveroo.

The decision stands in dramatic contrast to the picture painted just 7 weeks ago, when the company cut staff by 20 per cent with Milham saying the business would have enough runway for 12 months and all hubs would be profitable or breakeven after those most recent cutbacks.

Amid rising interest rates and cost of living pressures, it seems the discretionary spend the startup built its business on also topped the list of cost savings consumers made, too.

“Since we announced our structural changes in February, economic and capital market conditions have continued to deteriorate, and while the business has continued to perform well, we feel strongly that this is the right decision in the current environment,” Milham told staff in his email.

Milkrun first launched in Sydney in September 2021 as a 10-minute delivery service, after raising A$11 million in June that year. It went on to bank $75 million from Tiger Global in a Series A in early 2022 and had been looking to raise again in the second half of 2022, to no avail.

It serviced around 80 suburbs in Melbourne and Sydney.

The venture closes with enough cash in the bank to pay suppliers and redundancy packages to the company’s 400-plus employees, including delivery riders.

“We’ve always been committed to doing things the right way, and winding down the business while we still have a sufficient cash balance enables us to ensure our people and suppliers are paid in full,” Milham wrote.

VC funding for the startup also came from Airtree, as well as Skip Capital and Grok Ventures – the family investment vehicles of Atlassian billionaires Scott Farquhar and Mike Cannon-Brookes.

The business seemed to be flush with cash and was generating around $4 million in monthly revenue 12 months ago, and by February this year, average order value had doubled to more than $50.

The first signs of change emerged in June 2022, after just 10 months in business, when Milkrun cut overtime and casuals. It was losing money on every order – at the time $10 per delivery – which Milham said at the time was “actually a good number when compared to international peers”.

The 10-minute delivery rule was also relaxed.

While Milham talked of having $7 billion in total revenue by 2026, the bigger issue was that the sector lacked any real barriers to entry, so cashed up traditional players in the space – Woolworths and Coles – could easily mimic and match the offering.

Woolworths launched Metro60 offering delivery on 50 popular items in under an hour in June last year, backed by US tech giant Uber.

A crowded market was already losing challengers, with Send collapsing in May 2022, after it failed to find investors for a $15 million raise at a $50 million valuation.

Sydney-based rival Voly halved its workforce and closed warehouses the following month.

It launched in July 2021, raised $18 million in a Seed round led by Sequoia Capital India alongside Global Founders Capital and Australian-based Artesian Capital in December 2020.

By November Voly was also gone after also failing to find investors. It had a net loss of $13.6 million in FY22.

Creditors, owed $17.7 million, received between 15 cents and 27c in the dollar.

UK global food delivery giant Deliveroo pulled out of Australia late last year after losing $33 million.

In January, the Milkrun founder denied claims, first published in The Australian, that Milkrun’s investors, including Airtree, were looking for a buyer or strategic partner for the business.