Britain’s Deliveroo, a delivery platform that allows people to order food via an app, has just raised $385 million in a new round of funding, swelling the company’s valuation to over $2 billion and making it one of the most valuable tech companies in the United Kingdom.
This new funding followed the firm’s last fundraising in 2016, buffing up the total amount it has raised to $860 million. In the 2016 funding round, the company garnered $275 million in a deal, which valued the business at about $1.1 billion.
Deliveroo said that the firm will use the acquired funding to help the business expand into new cities and countries, as well as to enlarge its technology team and to work with more restaurants in developing delivery-only kitchen.
“With this funding we will invest further in our delivery-only kitchens Editions, in developing our technology and in taking Deliveroo to more towns and cities. This investment will take us to the next level and allow our riders to deliver ever more great food directly to people’s doors,” said Will Shu, who is the founder and chief executive officer of Deliveroo.
Deliveroo Editions are aimed at restaurants which are having a hard time coping up with the higher demand caused by Deliveroo orders. Deliveroo currently has Editions in London, Brighton, Reading, Leeds, Nottingham, Cambridge, Manchester, Melbourne, Hong Kong, Dubai, Singapore, and Paris.
US fund giants Fidelity Management & Research Company and T Rowe Price led the round of investment, and they will followed by other investors, such as DST Global, General Catalyst, Index Ventures, and Accel Partners. Fidelity and T Rowe Price have previously backed companies like Facebook, Snap, Airbnb and Tesla.
“There is a lot of room to rethink how we eat,” said Martin Mignot, who is a partner at venture capital firm Index Ventures, which has already invested in previous Deliveroo funding rounds.
Deliveroo has now raised a whopping total of $857.7 million, all coming from investors including Bridgepoint, a private equity group.
Last year, Deliveroo’s revenue ballooned by more than 600 percent, even when operating losses mounted, according to its parent company Roofoods in a regulatory filing on September 20.
“I remember how excited I was carrying out our first delivery. I hoped that people would love being able to order great food from their favorite local restaurants straight to their front door. I am proud that just four years on, millions of people use Deliveroo in over 150 cities around the world. This is all thanks to the hard work of our riders, the great restaurants that we work with and our brilliant customers. So I am extremely pleased that our new investors share this vision and have decided to make such a significant investment in our future,” said Shu in a statement.
Hellen Ellenbogen, a portfolio manager at T Rowe Price stated that Deliveroo has built an impressive service that was providing fast delivery of high quality food, expressing her confidence in the firm.
“We believe they have a world class team, strong technology capabilities, and the right business model. We are excited to see this capital put to use to build out their Editions concept and expand their geographic foot print,” said Ellenbogen.
Shu founded Deliveroo with Greg Orlowski in 2013. The company operates in an Uber-like model of food delivery, in which it connects riders, restaurants, and customers without having to employ its own couriers or produce its own food.
Similar to Uber, which is currently under scrutiny by the US Department of Justice, Deliveroo is also facing some criticisms regarding its policies.
According to reports, some of the firm’s delivery riders are taking legal actions to push for workers’ rights. Unions claim that Deliveroo is exploiting its staff by not offering basic protections and compensations. Deliveroo, as a response, said that it would give its self-employed riders insurance and/or sick pay if the government changed the law. Deliveroo also argued that if the government cannot change the law, it can instead create a new category of employment. The firm also asserted that the self-employed status gives both it and its staff flexibility.
Meanwhile, Shu handed himself a 22.5 percent pay rise last year, according to reports. His salary now amounts to £125,000. Additionally, he reportedly handed out roughly £4.5 million in share bonuses to directors and hundreds of other head office staff, in spite of an increase in losses.
On the other hand, the Central Arbitration Committee, which is a government body that handles and resolves workplace disputes, said that it is doing an investigation regarding the employment nature of Deliveroo’s drivers.
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