DoorDash picks up $600M Series G as valuation soars

By Ian Agar

DoorDash, the on-demand food delivery service, cannot stop delivering funding rounds, either.

The company has officially gone parabolic with a $600 million Series G on a stunning $12.6 billion valuation, a nearly 78% surge from its $7.1 billion valuation in February. Newcomer investors Darsana Capital Partners and Sands Capital joined existing investors Coatue Management, Dragoneer, DST Global, Sequoia Capital, Softbank Vision Fund, and Temasek.

DoorDash said Thursday that in 1Q, it saw an astronomical 280% YoY increase in annualized gross merchandise value to $7.5 billion. It's unclear if this figure is compared with 2017's results or if that is a forecast for the rest of 2019. The company did not immediately respond to a request for clarification.

The delivery service also reported operations in over 4,000 cities in the US and Canada, with a goal of growing to 100 Canadian cities by the end of the year, up from around 50 currently. 

Perhaps most pivotal in this regard was the company's Series D in March 2018, which saw SoftBank's Vision Fund leading a massive $535 million round. This funding injection reportedly allowed DoorDash to grow from its comparatively tiny 600-city footprint to the enormous list it now oversees.

While DoorDash was happy to expand so quickly thanks to the windfall, SoftBank is also happy to diversify its food delivery bets. The Tokyo-based firm is Uber's largest shareholder, and in turn, has helped fund DoorDash's competitor, Uber Eats.

Profitability question

The topic of profitability is not mentioned in DoorDash's blog post, continuing a wider investment trend of turning a blind eye to blood-red profit/loss statements in favor of pursuing industry disruption.

In hindsight, such priorities were apparent in DoorDash's massive Series D round last year. In allocating the funds, geographical growth was favored over working toward a consistently profitable operation, allowing the company to uproot local, in-house delivery services at restaurants.

The company has also sought to achieve a presence through corporate partnerships and white-label services. For example, on May 2, Wyndham Hotels and Resorts announced a partnership to offer free DoorDash delivery services to guests staying in over 3,700 of the hotel company's locations. Such a partnership complements DoorDash's existing white-label services provided to dining chains such as Denny's and Wingstop.

If DoorDash can continue striking high-profile corporate partnerships while replacing traditional in-house delivery employees at restaurants, a profitable business model could be worked out later to take advantage of an enormous established network.

Source. Pitchbook, Ian Agar, May 23, 2019

***

This post was brought to you by Woewoda Communications, your partner in the Canadian private equity and startup markets; offering strategic communications, public relations & investor relation services to Canadian VCs, PEs, Angels, Endowments/Trusts, Family Offices, and Canadian startups involved in ICT, IoT, blockchain, life sciences, healthcare, agribusiness, clean energy, fintech, AI and robotics.

Are you a Canadian GP/LP/CI or a Canadian startup that needs to grow or scale? Give us a call! One of our representatives would love to explain how we vertically design, and then systematically layer each of our communication platforms to effectively reach niche target audiences for our clients. WC offers a unique synergistic approach to effectively communicate our client's message to their target audience.

Serving Vancouver, Montreal, Toronto, Waterloo, Ottawa and Halifax.

DoorDash raises $400M round, now valued at $7.1B

By Anthony Ha

Delivery company DoorDash is announcing that it has raised $400 million in Series F financing.

Earlier this month, The Wall Street Journal reported that the company was looking to raise $500 million at a valuation of $6 billion or more. In fact, DoorDash now says the funding came at a $7.1 billion valuation.

The round was led by Temasek and Dragoneer Investment Group, with participation from previous investors SoftBank Vision Fund, DST Global, Coatue Management, GIC, Sequoia Capital and Y Combinator.

DoorDash  has been raising money at an impressive rate, with a $535 million round last March followed by a $250 million round (valuing the company at $4 billion) in August.

Co-founder and CEO Tony Xu  told me the round is “a reflection of superior performance over the past year.” Apparently, the company is currently seeing 325 percent growth, year-over-year, and it points to recent data from Second Measure showing that the service has overtaken Uber Eats in U.S. market share for online food delivery — DoorDash now comes in second to Grubhub.

“I think the numbers speak for themselves,” Xu said. “If you just run the math on DoorDash’s course and speed, we’re on track to be number one.”

He attributed the company’s growth to three factors: its geographic reach (3,300 cities in the United States and Canada), its selection of partners (not just restaurants — Walmart is using DoorDash for grocery deliveries) and DoorDash Drive, which allows businesses to use the DoorDash network to make their own deliveries.

He added that DoorDash has been “growing in a disciplined way, turning markets towards profitability.”

The funding, Xu said, will allow the company to continue investing in Drive, in its DashPass subscription service (where you pay $9.99 per month for free deliveries on orders of $15 or more from select restaurants) and in more hiring. And while DoorDash is currently available in all 50 states, Xu said there’s still plenty of room to cover additional territory in the U.S. and especially Canada.

“To me, this round … really changes the position of the company, not only as we march towards market leadership, but as we go beyond restaurants and become the last mile for commerce,” he said.

Not all of DoorDash’s recent news has been good. Along with Instacart, the company has been under scrutiny for subsidizing its driver payments with customer tips.

When asked about the criticism, Xu said the current compensation system was tested “not in a quarter, not in a month, but tested for months” before being implemented in 2017, and since then, there’s been a “significant increase” in retention among “dashers,” along with improved dasher satisfaction and on-time deliveries.

“When it comes to this pay model that has been in the press, the most important thing, I would say, is looking again at the facts and results,” he said.

Source. Techcrunch, Anthony Ha, February 21, 2019