DoorDash has added over $535 million in capital as the food delivery war begins to increase in intensity.
The large amount of new money comes from SoftBank, the Japanese tech giant, which has been sowing a reputation in Silicon Valley for handing out large sums of money during growth rounds. In addition, backers such as GIC, Wellcome Trust and Sequoia returned to help with more.
The funding round has become a turning point for the food delivery company, which struggled to raise cash in 2016 as Silicon Valley’s bubble let some air out.
At that time, DoorDash was attempting to raise at a valuation of $1 billion, but came up short. It sold shares for a discount, leading to a big debate as to whether it had gone through a down round of financing valuing the company as less that investors previously had done.
However, this time, the company made it clear investors are buying into the company’s delivery vision, and in a large way thanks to the involvement of SoftBank.
The $535 million funding round now gives the company a value of $1.4 billion, says one person close to this matter, which makes DoorDash the most recent entrant into the Unicorn club startups in Silicon Valley that are valued at $1 billion or more.
CEO at DoorDash Tony Xu said that skepticism remains in this space. However, on the positive said he said he thinks a few winners are beginning to emerge.
The food delivery industry is one that is considered both very competitive as well as completely wide-open with opportunity, instead of being a space of winner takes all.
Morgan Stanley research predicts up to 40% of all restaurant sales will be available in the food delivery market by 2020, which it says will be approximately $220 billion.
The market at present is estimated to be only approximately $30 billion, say analysts, which means there is a huge amount of room remaining for companies to expand rapidly over the next couple of years as more restaurants move to online sales.
Due to this, many companies fighting for the same customers, drivers and restaurants, and having the money to give incentives to all parts, is increasingly becoming the weapon of choice in the food delivery wars.
The funding round of $535 million is an incredibly big boost for any startup especially for one that previously had raised only $170 million since its 2013 launch.