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Bloomberg
Deliveroo, a London-based maker of an app for ordering take out, announced it has raised $275 million to fuel growth and take on well-funded competitors. The deal values Deliveroo at more than $1 billion, according to a person familiar with term sheet who asked not to be named as the deal is private. The same figure is also being reported by TechCrunch and Sky News.
The cash infusion is on top of another roughly $200 million Deliveroo raised last year. The considerable fundraising shows what a cost-heavy and competitive market food-delivery has become. In Europe, Deliveroo is competing with Just Eat, a U.K.-based company valued at more than $3 billion; Uber, which has been expanding in to the sector; and Delivery Hero, backed with more than $1 billion from investors.
Deliveroo, founded in 2013, has become one of the top delivery services in Europe, with its kangaroo logo visible on scooter-riding couriers throughout cities such as London and Cambridge. It has expanded elsewhere on the continent, as well as Hong Kong, Singapore and United Arab Emirates. It’s a cost-heavy business — with money needed to expand in new cities and pay drivers — but the company collects a fee on each purchase.
The company said it’s profitable in several of its “established markets,” without being more specific.
The business model has proven attractive to venture capitalists, who last year poured $5.5 billion into food-delivery companies globally, according to research firm CB Insights. Uber Chief Executive Officer Travis Kalanick, who has raised more money than any other venture-backed startup in the world, sees food delivery as a natural extension for his company’s network of cars and drivers already on the road giving people rides.
In taking on Uber, Deliveroo CEO William Shu said his company’s strongest advantage is its focus on delivering food, compared to Uber’s core business as a taxi service. “What we’re not going to do is pick people up and drive them around,” Shu said in an interview.
Martin Mignot, a partner at Index Ventures, an early backer of Deliveroo, said the company’s business model works because as it builds a customer base drivers can deliver more meals. “The more volume you get the better you can utilize the drivers who we are paying by the hour,” he said in an interview. “There is massive potential.” He said the company is unlikely to enter the U.S market, however.