(Bloomberg) — The future of one of New York’s highly competitive rapid-delivery apps, Buyk, is hanging in the balance because it can’t get financing from its Russian founders.
James Walker, who joined Buyk as chief executive officer in November from restaurant chain Nathan’s Famous Inc., told Bloomberg he was notified by the board that he was being furloughed indefinitely. “No timing was given, only that they’re working on a transition plan and managing the impact of the war in Ukraine,” Walker said. The New York Post earlier reported on Walker’s fate.
Buyk, which was launched in New York last year, is a unit of Samokat, one of Russia’s biggest instant grocery-delivery services. It’s partially owned by state-controlled bank Sberbank, which landed last month on the list of sanctioned entities by the U.S. government over Russia’s invasion of Ukraine.
But Walker says that wasn’t the primary reason Buyk’s access to funding was compromised. Buyk’s founders, Slava Bocharov and Rodion Shishkov, had been providing bridge financing while the company prepared to close its next funding round, Walker said. “Our founders are not implicated in the sanctions. The restrictions put on the transfer of funds from Russia by Vladimir Putin is what really caused this issue.”
Buyk already furloughed almost all its employees, about 900 people, on Friday amid funding concerns. The majority of Buyk’s 38 warehouses, or dark stores, are in New York, but the startup also expanded to Chicago this year through a partnership with Just Eat Takeaway.com NV’s Grubhub.
Buyk has been exploring selling itself in a bid to secure capital. Walker said management had “reached out to all kinds of potential strategic partners in the U.S.,” including DoorDash Inc., Gorillas and Gopuff. “There’s a lot of interest just because of the strength of the brand and the model,” he said. “As far as having a solidified buyer acquire at this point in time, there are still talks going on.”
The funding uncertainty also puts a halt on Buyk’s Grubhub partnership, according to people familiar with the matter. The project is on hold until further notice and doesn’t disrupt any operations since none of Buyk’s locations was live on Grubhub yet, the people said, asking not to be identified discussing private information.
Buyk has received $46 million in venture funding, including from CM Ventures, Fort Ross Ventures and Citius, according to PitchBook.
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