UPDATE, June 19, 2020: DoorDash has secured $400 million in a new round of funding led by Durable Capital Partners, with Fidelity and existing investor T. Rowe Price joining, according to Axios. The food delivery company is now worth $16 billion.
- DoorDash is reportedly nearing new funding that would value it at over $15 billion before the cash infusion, according to The Wall Street Journal, which cited people familiar with the manner.
- The company is expected to sell hundreds of millions of dollars of equity to existing investor T. Rowe Price Group, Fidelity Investments and others. SoftBank's Vision Fund, which already backs DoorDash, is also considering participating in this funding.
- The size of the deal and all of the investors are still being finalized and it could still not happen.
The novel coronavirus pandemic has led to a resurgence of investor interest in food aggregators. For example, Slice, an ordering and marketing platform for small pizzerias, raised $43 million in May. Food delivery aggregators are seeing an influx of orders, partnerships and new customers. Pre-COVID-19, investors were starting to push back against food delivery companies, especially with competition getting fierce and ongoing profitability issues.
DoorDash’s valuation has only grown in the two years, reaching $13 billion in 2019, 10 times what it was in 2018, according to The Wall Street Journal. DoorDash’s last funding occurred in May 2019 when the chain raised $600 million in funding. The company also expects to break even during the quarter ending June 30, which would be the first time it’s neared profitability since its foundation in 2013.
These latest developments and increased investor interest could bode well for DoorDash’s IPO. The company filed to go public in February and still plans to have a listing this year despite the economic impacts from the coronavirus.
And with DoorDash about to face global food delivery Just Eat Takeaway, which just announced yesterday it is acquiring Grubhub and entering the U.S., the additional funding could make it more competitive and allow it to continue investing in growth.
Funding has been particularly beneficial for companies to provide free delivery offers and aggressively enter new markets, tactics that helped DoorDash overtake Grubhub in 2019 to become the top delivery company. DoorDash also has been cutting commissions for new restaurant partners during the pandemic, which has helped it add more restaurants to its platform and gain an even stronger position in the food delivery segment.