DoorDash is now one of the hottest startups after a group of investors which includes the venture capital arm of Japan-based Softbank invested $535 million in it. The restaurant delivery service announced the investment today on its website, saying that SoftBank Group led the Series D financing, while previous investors Sequoia Capital, Wellcome Trust and Singapore-based sovereign wealth fund GIC also participated.
DoorDash didn’t state the valuation it had received on the fundraising round, but CNBC, Recode and TechCrunch all report that the fundraising round values the company at about $1.4 billion, citing unnamed sources familiar with the deal. Data from CrunchBase indicates that the company was valued at over $700 million in a past fundraising round, which brought in about $186 million.
CNBC adds that the last fundraising round for DoorDash amounted to $127 million in 2016. At the time, the company was reportedly seeking a $1 billion valuation, The Wall Street Journal reported. Along with this latest $535 million investment, the food delivery company is adding Jeffrey Housenbold of Softbank and Jeremy Kranz of GIC to its board of directors.
The company originally only asked for $200 million, but in a whirlwind round of bidding, investors wanting a piece of it kept raising the amount they were offering, according to Recode. In fact, the website adds that SoftBank and GIC were going head to head in a bidding war over DoorDash. In the end, SoftBank ended up leading the funding round, while GIC participated in the investment group.
Recode and CNBC also note that SoftBank has been pouring capital into Uber and numerous rivals, although apparently, DoorDash doesn’t mind that the Japanese firm invests in its rivals. The food delivery service competes with UberEATS, the ride-sharing firm’s food delivery service.
SoftBank has also invested in dog-walking firm Wag and several ride-sharing firms in countries around the world. It holds a 15% stake in Uber and is now the company’s biggest shareholder, and it also has stakes in Grab, Ola, Didi and 99, all of which are ride-sharing firms in other countries. SoftBank also mentioned in the past that it would be interested in investing in Lyft as well.
TechCrunch asked DoorDash Chief Executive Tony Xu whether this latest round of fundraising means that they’re beginning to consider filing for an initial public offering. However, he seemed non-committal in his answer, saying that the funds merely provide “more flexibility” when it comes to where they want to invest. The company plans to spend the money on more employees and expanding to add another 1,000 to the 600 cities it currently operates in.
Even though DoorDash management might not be thinking IPO yet, it sounds like they could be getting to that stage. Xu told TechCrunch that their contribution margins became positive last year, which means that they turn a profit on each order. That’s certainly more than what some tech unicorns that have already gone public can say. Cash burn remains an issue with many of them as they post quarterly losses on a regular basis.
