Deliveroo has secured another $180m (£132m) of funding from shareholders including Amazon, in a move that values the takeaway delivery company at more than $7bn as it gears up for a blockbuster stock exchange listing.
Will Shu, Deliveroo’s founder and chief executive, said the London-based company would use the new cash from existing investors to improve the business for “consumers, riders and restaurants”, as he confirmed for the first time that the company was working on plans for an initial public offering (IPO).
Deliveroo is among the internet firms to benefit from big pandemic-related shifts in consumer spending, and the company said the new round of investor funding had valued the company at “over $7bn”.
A successful stock market flotation would complete the company’s recovery from the initial shock caused by the pandemic.
Last April the Competition and Markets Authority(CMA) waved through Amazon’s purchase of a 16% stake in Deliveroo after the takeaway delivery service warned it could collapse after restaurant closures during the first lockdown resulted in a “significant decline in revenues”.
The cash is being spent on “new tech tools to support restaurants, provide riders with more work and extend choice for customers”, said Shu, a former investment banker who launched the business from his London flat in 2013. “We are really pleased our shareholders see the opportunity and growth potential ahead of us.”
The company plans to expand its network of delivery-only kitchen sites – called “dark kitchens” – grocery delivery and subscription services, as well as allowing more restaurants to take orders via their own websites.
City investors are eager to put their money into internet companies – such as the The Hut Group, which floated in September – who are benefiting from big increases in online spending. That appetite has encouraged other online companies, including the greetings card and gift retailer Moonpig, to announce plans to sell shares.
Last week Deliveroo rival Just Eat said UK orders had jumped 400% in the final three months of 2020 as coronavirus restrictions kept people at home.
Speaking in December, Shu said Covid-19 has accelerated consumer adoption of food delivery services by about two to three years, with order volumes in the UK and Ireland currently running at double 2019 levels. “We’ve demonstrated our model is profitable,” he said, adding that the previously loss-making company had been “profitable at the operating level for over six months now”.
Shu added that the company had seen an “incredible increase in new customers joining the platform”. “We also saw our existing customers looking to order more often, also ordering for the family more frequently, we saw average basket sizes increase, and also ordering a wider range of products.”
In 2019 the CMA had embarked on an in-depth investigation into Amazon’s investment in the company which it feared could leave customers, restaurants and grocers facing higher prices and lower quality services. Deliveroo did not state how much each investor had contributed in the latest funding round but Amazon’s stake has not increased as a result.