Food delivery service DoorDash has raised $400 million in additional capital to help grow the company. This Series H round of financing was led by new investors Durable Capital Partners LP and Fidelity Management & Research Co., as well as existing investors, funds and accounts advised by T. Rowe Price Associates, Inc., said DoorDash in a June 18 blog post. This new investment brings DoorDash’s valuation to just under $16 billion.
“DoorDash has pioneered a unique logistics platform that facilitates the delivery of food, groceries and household essentials and has become ingrained in the lives of local communities as an essential service. We are excited to invest in this excellent team,” said Henry Ellenbogen of Durable Capital Partners LP in a statement.
“More important than ever, DoorDash is innovating on products and services that power local commerce and enhance their larger community including Dashers, customers, and merchants. We believe in this company and the team,” Ellenbogen added.
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DoorDash will use the new capital to support DoorDash merchants, offer customers safer and more convenient ways to order and shop, and help DoorDash delivery drivers to make flexible income at a time when they most need it.
Earlier this year, DoorDash privately filed to go public, but the pandemic likely changed those plans, as no timing of an IPO has been announced yet. Last year, the company lost an estimated $450 million, but with millions of Americans staying and working at home during shelter-in-place orders, their 2020 financial situation will probably be much better.
Throughout the pandemic, the food delivery service has been doing its part to help the communities it serves. In April, the company made a commitment to expand its Project DASH program to serve vulnerable communities during the COVID-19 pandemic. The program was launched in 2018, and DoorDash is doing more to provide last-mile delivery support for senior centers, schools, food pantries and others with limited access to food. They are doing this through a partnership with United Way Worldwide and increasing capacity to work with any government agency or nonprofit they can reasonably support, among other things.
At the end of May, DoorDash launched Main Street Strong, a way for the company to support restaurants who have been severely challenged by the pandemic. This included providing relief and support to their restaurant partners. Between mid-March and May 31, the company helped restaurants save $120 million.
“Succeeding in the restaurant industry requires an unmatched level of grit, ingenuity, and determination, as well as an unwavering dedication to serving others. That’s never been truer than it is now,” said DoorDash in a blog post. “We’re proud to report that restaurants on DoorDash are four times more likely to have remained open during the COVID-19 pandemic compared to U.S. restaurants as a whole – and we’re ready to help them continue to stay up and running.”
Part of the Main Street Strong program has been talking to restaurant partners to find out what they most need. Part of that is continuing to offer a range of experiences for customers, whether it is dine-in, carryout or reaching customers in new ways. The food delivery service is helping restaurants build their own digital storefronts. They also expanded their Weblinks program for restaurants who want DoorDash to manage their digital presence. Through the end of the year, DoorDash will not take any commissions for the Weblinks program.
As the pandemic continues, the food delivery service industry is contracting. In June, Just Eat Takeaway.com acquired Grubhub for $7.3 billion in an all-stock deal. This deal made the combined company the largest food delivery company in the world outside of China. Last week, Uber made an offer to buy Postmates for $2.6 billion, reports The New York Times.
As of January 2020, Second Measure reported market share in terms of monthly sales:
- DoorDash – 38%
- GrubHub, including Seamless and Ear24 – 31%
- Uber Eats – 20%
- Postmates – 10%
- Other – 2%
Many of the food delivery services offer a subscription option. DoorDash, for example, offers the DashPass. For $9.99 a month, subscribers receive free delivery and lower service fees from select restaurants on orders that exceed a minimum amount.
As the food delivery service industry has matured, it was inevitable that there would be some big changes, including contraction in the marketplace. Right now, it looks like DoorDash and Just Eat Takeway.com/Grubhub are the big winners, and this new investment will help DoorDash compete with the new combined company. If Uber acquires Postmates, that could make them a strong third-place contender. With the pandemic continuing as new cases of coronavirus grow, the need for food delivery services will grow along with it. The time is ripe for investment.