DoorDash is Getting Popular Among Investors

Investors reactions

DoorDash is getting more funding now. This demand for delivery service has increased during the coronavirus pandemic.

DoorDash has gained $400 million from its new investor, Durable Capital Partners, and Fidelity. It has increased the company’s value to $16 billion. Previously, the company was valued at $12.6 billion when it raised $600 million in May 2019. 

The financing comes as the platform “has become ingrained in the lives of local communities as an essential service,” said Henry Ellenbogen of Durable Capital Partners in a statement. 

Meanwhile, food delivery companies are heavily competing against each other. As demand for food delivery services has increased during the lockdown. 

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Similarly, Instacart a grocery delivery startup raised $225 million. This amount increased its value to nearly $14 billion. After an increase in demand for a Netherland based company, Just Eat, which beat our Uber in a bid to merge with Grubhub. However, the merger is expected to close in early 2021. 

In addition, this will be the first time that Just Eat takeaways will be operating in the US. 

The Netherland based company is operating in 23 countries. Moreover, the company’s shareholders will approve the merger between both the companies and the deal will close by early next year. 

The all-stock deal values Grubhub at $7.3 billion. In after-hours trading, the company’s shares increased to 6%. 

However, last August, DoorDash acquired Caviar a premium restaurant delivery service. The company acquired its rival Caviar for $410 million. This acquisition has made the company US leader in terms of sales. In May the company made a profit of about 44% from meal delivery sales in the US. 

The company has not gone public yet about its new financing. On the other hand, the company revealed in February that it has submitted confidential paperwork with the US Securities and Exchange Commission to go public. 

Similar to other food startups, the company is facing a major regulatory battle in the state of California. DoorDash has put $30 million into a joint-ballot initiative that can exempt them from the new AB-5 law if passed in November. However, this law will make it more difficult for DoorDash to continue classifying workers as independent contractors rather than employees. 

DoorDash has also been in hot waters for a controversial tipping policy for delivery workers. As a result, the workers at DoorDash suffer where tips add up to their base pay. Consequently, the policy has been changed since a lawsuit filed by DC Attorney General Karl Racine in November that seeks to recover the “millions of dollars in tips that were used to subsidize DoorDash’s payments to Dashers,” and impose fines.

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