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The food delivery startup DoorDash backed by SoftBank Group Corp. and Sequoia Capital has received a new investment of $100 million.
It seems that the San Francisco-based on-demand prepared food delivery service DoorDash Inc.’s $2 billion “war chest” is getting bigger and bigger every day. Started back in 2013, this food delivery startup is obviously getting an injection of $100 million, according to the sources familiar with the situation.
The startup has a pretty strong back-up including the likes of SoftBank Group Corp. and Sequoia Capital and this funding comes on top of a $600 million investment round that announced back in May. The investor is allegedly a New York-based hedge fund manager Darsana Capital Partners. The extra $100 million came from a first-time DoorDash investor – T. Rowe Price Group Inc. This account has reportedly been part of the same funding round.
DoorDash raised its funds relatively recently but it was able to come up with almost two-thirds of around $2 billion in total money collected during the last year and a half. SoftBank first came up with the investment in DoorDash in 2018, and this May, investors decided that this non-profit company was worth $12.6 billion.
DoorDash made money from SoftBank’s investing climate of giving the whole bunch of money meant for startups to use in order to contribute to prices and gain some share at the expense of competitors.
Some analysts agree however that DoorDash followed the SoftBank model with its ‘ kind of’ destructive path of growth at all costs and a backward business model that doesn’t account for profit.
A spokeswoman for the company said:
“DoorDash may find itself unpalatable to public market investors, who have largely turned against big unprofitable stocks. The company has been eyeing an initial public offering next year. We believe we have the right unit economics to enable us to build a sustainable and profitable business.”
According to a market research company Edison Trends the company is right now the biggest food delivery player in the country, made up of 35% of consumer spending in the category.
DoorDash had an internal meeting regarding the results of its new pay model.
In its blog post they explained:
“The economic research and consulting firm Beacon Economics has now conducted an initial descriptive analysis of the data by comparing average hourly earnings for Dashers in August 2019 (the last full month when all Dashers were on the old pay model) to average Dasher earnings in October 2019 (the first full month when all Dashers were on the new pay model).”
Chief Executive Officer Tony Xu announced the company paid workers a certain amount per job, inclusive of tips.
“We know that our new model is not perfect, and we are continuing to make changes in response to Dasher feedback. Even though overall earnings have gone up, we know that initially, earnings were less consistent from one delivery to the next, and we’ve heard from Dashers that some offers are simply too low,” said the CEO.