As DoorDash Looks For More Money, A Quick Rewind Of its Fundraising Past

Morning Markets: There’s still money in delivery. DoorDash is proving the fact.

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Rewind the tape a few years and on-demand startups were nowhere. As the market learned how expensive it was to build a delivery startup at scale, capital became scarce.

Back in 2016 being an on-demand startup was hard. Postmates had to raise at a flat valuation, and DoorDash missed its target of becoming a unicorn by around $300 million. In the same year, on-demand food startup SpoonRocket shut down amidst what TechCrunch called the “on-demand apocalypse.”

But that was all then, mind. Now is now, and today on-demand is hot. Not on-demand ride-hailing, just on-demand delivery. If you do that, times are pretty good. Unless you are Uber doing on-demand deliveries, then you are still not hot. Got it?

Good. News out recently brings us to this topic as DoorDash looks to add another chunk of capital to its cap table. At a new, higher valuation to boot.

The Round

DoorDash is raising “at least $500 million” at a valuation of “about $13 billion” according to Bloomberg. The Wall Street Journal writes that DoorDash is looking for “between $650 million and $750 million” at a post-money valuation that “would approach $13 billion.” And finally, The Information first broke the news that DoorDash was looking to raise new capital at a valuation north of $10 billion.

That’s a lot of news about a single round. But when there’s that much smoke, there’s nearly always fire of some sort. So it’s more than likely that DoorDash is working to close a monster new round, at a monster new valuation.

Which is odd, really. It’s not odd that DoorDash can raise more money. Deliveroo just did, Postmates is well capitalized, and the market for food delivery is large. But it’s odd that DoorDash is raising more money.

After all, the company has been doing little else lately:

That’s rapid valuation growth by literally any standard. Indeed, the investors powering DoorDash are betting that it is creating prodigious value at the moment, or they are betting that with their capital injections the firm is set to consume quite a lot of the delivery market.

DoorDash, like Postmates, is working on robots of some sort. That must cost a lot of money. But otherwise, the firm may be raising to power new markets, fund current operations, and perhaps shore up its balance sheet in case of a macro downturn. I also wonder if this is just another round that DoorDash is raising because it can.

Slack did that for a while, and it worked out pretty ok.

Regardless, what’s clear is that the 2016 on-demand market is behind us. In 2019 what was anathema before is hot once again. Just wait for three years from now. Maybe things will have reversed yet again.

Illustration: Li-Anne Dias.