Last week, San Francisco-based food delivery startup Postmates Inc. filed confidentially for an initial public offering with the Securities and Exchange Commission, reports the Wall Street Journal. Postmates has not specified a time frame to complete the IPO, nor the size or price range they are targeting. Postmates confirmed the filing in a brief February 7 statement. Postmates said the IPO will begin after the SEC has completed its standard review.

This news comes just three weeks after Postmates announced it raised $100 million in Series F funding. At that time, the company was valued at $1.85 billion. Four months earlier, Postmates announced $300 million in funding, as the company marched toward an IPO.

What makes a food delivery startup worth nearly $2 billion? There are several factors that make Postmates attractive to investors. Looking back to the September funding round, Postmates shared some of their impressive growth statistics:

• Postmates’ average annual growth was more than 250 percent over the past four years, with gross margins now close to 50 percent.
• Postmates makes millions of deliveries each month, generating more than $1 billion in gross merchandise volume per year.
• Postmates saw record adoption of its Unlimited subscription model in 2018, doubling the number of total subscribers from 2017. This huge influx of subscribers gives Postmates – and its investors – some solid recurring revenue on which to rely going forward.
• The Unlimited subscription plan’s growth has been 300 percent, year-over-year, with one of every two orders coming via the Unlimited subscription program.

“The transformation of how commerce moves in cities demands that we build the most innovative tools for businesses to keep up and distribute their products to the modern consumer – efficiently and cost effectively,” said Bastian Lehmann, Postmates CEO and co-founder, in a September 18 statement. “Postmates is proud to be the first and largest on-demand network that is enabling the growth of retail across the country, and today’s investment accelerates our ability to pair technology with the vitality of our neighborhoods.”

The company’s Unlimited subscription program, which launched in 2016, is contributing to the company’s success and its long-term value to investors. Subscribers pay $9.99 a month, or $95.88 per year, after a free seven-day trial to get free delivery on restaurant deliveries more than $15 from more than 350,000 restaurants in major cities including Los Angeles, New York City, Miami, Chicago, Phoenix, Seattle and more. Subscribers also skip added fees for small carts and peak pricing, and they get exclusive membership offers including promotions, discounts and invitations to exclusive events. Postmates claims that a membership pays for itself for subscribers who place one order a month. The average Unlimited subscriber saves $90 a year.

As we noted in our January story, the eight-year-old Postmates has competition from services like Amazon Restaurants, Uber Eats, Door Dash and Grubhub, but Postmates has some serious financial backing. What sets Postmates apart is Postmates’ partners and ultimately its customer service – Do they deliver on time? Is the food still fresh when you get it? Do they keep their promises to their customers?

Insider Take:

The way consumers shop and dine has changed dramatically in the last several years. Postmates recognizes that, and it is meeting customers where they are – at home or work. When the busy-ness of life takes over and customers don’t have time to shop or cook, Postmates is there to save the day – and to make sure customers eat without having to go out. The subscription program and the huge infusions of cash have provided the company with additional stability, making the time right for an IPO.