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$275 million Raised by Deliveroo for Food Delivery Expansion


08/07/2016


In a fund raising round that involved early investors in Facebook and Airbnb, Food delivery start-up Deliveroo has managed to raise $275 million as the company seeks to venture into more new markets with its service.
 
While General Catalyst, which counts Airbnb and Snapchat among its investments and existing investor DST Global, which has also invested in the likes of Spotify also joined the round, the round was led by private equity firm Bridgepoint. Investment also came from Greenoaks Capital.
 
Restaurants in cities partner with Deliveroo to deliver products to customers through apps. Rather than cheap takeaways, such restaurants are often mid-priced ones.
 
With revenues rising around 20 percent month-over-month, the U.K. start-up has seen strong growth. The founder and chief executive is looking to expand with the fresh injection of capital even as the company currently operates in 84 cities across 12 countries.
 
"We want to expand more in markets we have a presence in and into other new markets," Will Shu, CEO of Deliveroo, told CNBC. Shu however did not name specific cities or countries where the expansions would be carried out.
 
A project to allow restaurants to expand is also being trailed by the company. Placed in locations that are out of reach to a restaurant, the company has began investing and opening up its own kitchen spaces since earlier this year. For example, at the moment due to constrictions imposed by logistics, delivering food to the suburbs for a single restaurant in the center of London wouldn't be possible via Deliveroo even if the restaurant wanted to do so. However the establishment can be allowed to cook food closer to areas where it previously couldn't deliver if there is a kitchen away from the main restaurant and near the suburbs.

Shu said we are now at "food delivery 4.0".
 
"Food delivery 4.0 in my mind is us solving the harder problem for restaurants, physical infrastructure. We want to own more of the supply chain and it's really critical to help restaurants solve what is the toughest problem," Shu told CNBC. A "substantial investment" with the new funds would be made in building these off-site kitchens, Shu added.
 
However competition is very high in the food delivery space. Strong competiton is being offered by even Uber, which recently expanded its food delivery service to London, in addition to rival companies like Delivery Hero.
 
Uber is known to sink money into projects it is trying to get market share in due to the deep pockets that this company with a valuation of around $62.5 billion, has. In trying to catch up with local taxi app Didi Chuxing, the company lost $2 billion over two years in China. However earlier this week Didi bought out Uber's China unit.
 
However a potentially race to the bottom which could happen if Uber steps up its investment is not feared by Shu.
 
"As long as we are heads down focused and obsessed with food delivery then we will be just fine," Shu said, The company is profitable in some markets, Shu added.
 
"You have a lot of different things going on, it's not just Brexit. The tech financing environment has changed over the last year, you couple that with Brexit, and couple that with the problems in Europe, it was harder," Shu told CNBC.
 
(Source:www.cnbc.com)


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