UPDATE: Deliveroo confirmed this funding via press release sent out today. From that announcement:
- Amazon is set to be the largest investor in Deliveroo’s Series G funding round
- Deliveroo is raising a total of $575MM with participation from Amazon alongside existing investors T Rowe Price, Fidelity Management and Research Company, and Greenoaks
- Deliveroo will invest heavily in expanding the company’s tech team at its UK Headquarters, expand further to reach new customers, and continue innovating through its delivery-only super kitchens, “Editions”
Original post:
Amazon is in negotiations to invest hundreds of millions of dollars in UK-based food delivery service Deliveroo, according to a report in Sky News. If true, Amazon’s money would be part of a larger £450 million (~$575M USD) fundraise by Deliveroo.
Deliveroo has raised close to a billion dollars already, and Sky’s sources were unable to peg a clear valuation on the company if this new round goes through. Deliveroo was valued at $2 billion during its last round of funding a year and a half ago.
For Amazon, this deal is basically an if-you-can’t-beat-’em-buy-into-’em strategy. In November of last year, Amazon shuttered its Amazon Restaurants delivery service in the UK after two years of trying to break into that market. As my colleague, Catherine Lamb wrote at the time:
Despite its big name and massive reach, it seems Amazon Restaurants couldn’t compete against existing food delivery companies in the U.K. like Deliveroo and Uber Eats. Since 2013, Deliveroo has carved out a sizable chunk of the U.K. food delivery market and become one of the fastest-growing tech companies in Europe. The company also differentiates themselves with their Editions project: geographically-targeted hubs of delivery-only cloud kitchens Deliveroo began rolling out in 2017.
Speaking of Uber Eats, Deliveroo’s reported fundraise comes on the heels of Uber’s IPO. Though Uber’s IPO was anemic, it still raised $8.1 billion that will help fuel Uber Eats’ expansion to 700 cities from the current 500.
Additionally, Uber is looking to expand into other food verticals, including cloud, or “ghost” kitchens, that would house delivery only restaurants that are only available on the Uber app. The company has even reportedly started leasing space in Paris to build out such a ghost kitchen.
This move into the virtual restaurant game would then pit Uber Eats against Deliveroo not only for restaurant delivery dominance, but also makes a play for Deliveroo’s own ghost kitchen program: Deliveroo Editions.
An influx of cash (sprinkled in with some Amazon-style know-how), then, puts a few more arrows in Deliveroo’s quiver to put up a bigger fight. Or, as my colleague, Catherine pointed out, bring the fight to the U.S., where Deliveroo isn’t active yet.
*The headline for the original version of this post said Amazon invested hundreds of millions in Deliveroo when that was still the report. We updated the headline to more accurately reflect the story.
