Delivery service startup DoorDash raises $535 million to expand its restaurant delivery service
Delivery service startup, DoorDash, announced today that it raised $535 million in Series D funding. The massive money infusion is led by the SoftBank Group (“SoftBank”) with participation from existing investors Sequoia Capital, GIC and Wellcome Trust. SoftBank’s Jeffrey Housenbold and GIC’s Jeremy Kranz will join Sequoia’s Alfred Lin and Kleiner Perkins’ John Doerr on DoorDash’s board of directors. “This is the largest financing to date by a U.S. restaurant delivery platform,” the company said in a company release.
The company plans to use the funding to double-down on DoorDash Drive platform. The platform enables a merchant to offer delivery to customers that have placed orders directly with the restaurant.The Drive platform has grown 1,300 percent year-over-year. DoorDash is becoming a last-mile logistics platform that can power deliveries beyond food, whether for retail or other types of partners.
Founded in 2013 by four Stanford students with experiences from Facebook, Square, Vevo, and eBay, DoorDash enables delivery in areas where it was not previously available. The company’s mission is to empower small business owners to offer delivery in an affordable and convenient way. “Our vision for DoorDash is to build the last-mile logistics layer to empower every business to thrive in the digital and convenience economy,” said DoorDash CEO and co-founder, Tony Xu. “Today’s investment by the most forward-looking firms in the world accelerates our ability to achieve this vision.”
The new cash infusion, especially from renowned investors, is an affirmation that they now believe in DoorDash business. Back in 2016, DoorDash sought to become the next startup with a $1 billion valuation, but has struggled to find investors to meet that price. “There still remains to be skepticism in our space,” DoorDash CEO Tony Xu said about the fundraising process this time around. “On the flip side, I think it’s also become obvious that there are a few winners emerging.”
In 2017, DoorDash more than doubled delivery volume, while growing gross profits six fold year-over-year. This fast and sustainable growth played a role in the investors’ enthusiasm for the company. DoorDash’s growth rate has accelerated further in 2018, and this year the company is expected to triple its geographic footprint from 600 to 1,600 cities and hire more than 250 people across its corporate offices.
“DoorDash’s technology advantages, exceptional management team and relentless merchant focus are reflected in their stunning growth and impressive unit economics,” said Jeffrey Housenbold, managing partner at SoftBank Investment Advisers. “Food delivery is just the first chapter. Tony and team have a bold vision to create the world’s best logistics company, and we’re thrilled to partner with them to help accelerate their progress.”
“DoorDash has always stood apart from the pack in its restaurant-first approach and operational execution,” said Alfred Lin, partner at Sequoia and DoorDash board member. “We’ve been impressed by the company’s progress since their Series A, and they’ve proven that they have the team, technology and expertise to lead.”