DoorDash has raised $400 million in new funding, giving the third-party delivery service a $16 billion post-money valuation, according to a report in Axios’ Pro Rata newsletter. This latest round was led by Durable Capital Partners, with participation from Fidelity and existing investor T. Rowe Price.
Today’s Axios story follows a Wall Street Journal article last week that said the company was close to getting funding that would value the company at $15 billion. This round would bring the total amount of funding DoorDash has raised to $2.5 billion.
Back in February of this year, DoorDash had confidentially filed to go public. Around that same time, the COVID-19 coronavirus erupted into a global pandemic. With shelter-in-place orders instituted around the world, demand for food delivery skyrocketed. As Axios points out, along with this surge in demand came increased costs for DoorDash, which needed to implement new contactless delivery features and provide PPEs to its delivery drivers.
In addition to rising costs, DoorDash’s new funding comes amidst new regulatory and competitive issues. Just yesterday the San Franciso DA sued DoorDash over how the company classifies its workers as contractors and not employees (which would give them overtime pay and other worker benefits, which would cost DoorDash a lot of money). There has also been some consolidation in the third-party delivery space as last week Just Eat Takeaway acquired Grubhub.
There are still a lot of unknowns about how this pandemic will or won’t permanently alter our relationship with restaurants. A recent spike in coronavirus cases where states have re-opened may keep patrons away from dining out and drive them deeper into delivery. The question now is whether the massive amount of money DoorDash has raised is enough to keep it going through all of this change.