On the heels of online food delivery company Just-Eat’s successful IPO in London earlier this month, its big, still-private rival Delivery Hero has raised another mammoth round of funding: a Series F of $85 million, led by a “6 billion dollar global investment fund” that Delivery Hero tells me does not want to be named just yet; as well as existing shareholders.
Update: We have heard from a source that the lead investor is Luxor Capital Group, which is an interesting twist. Luxor is a hedge fund led by Christian Leone, who had once been a VP at Gilt and co-founded luxury e-commerce startup Vaunte. We’re contacting Delivery Hero and LCG to ask about this.
The funding will go straight towards Delivery Hero’s home market of Germany and other hotly contested countries — “to defend our leading position in key markets and in particular Germany where we see increasing competition,” in the words of CEO Niklas Ostberg. Specifically, Delivery Hero will be investing a lot more in marketing and price discounts to woo hungry consumers. “As a first step to defend our position in Germany, we will launch a permanent 25% promotion on selected restaurants for our users to try out,” he says. “Later this week we will also announce a media deal in Germany [valued at] high double-digit million Euros.”
Delivery Hero has raised around $285 million since 2011 — with over $170 million this year alone if you also count the $88 million announced in January. As a point of comparison, Just-Eat’s IPO raised $168 million (£100 million). Delivery Hero is not disclosing its valuation right now, but the market cap for Just-Eat is $1.36 billion.
So why raise more money instead of tapping what appears to be a friendly market for tech IPOs in Europe right now — and for food delivery companies in particular?
Ostberg says it’s not a question of if for his company, but when. For now it looks like Delivery Hero is aiming for 2015 for a possible IPO. “This year we like to stay private in order to keep our speed and focus on building a great business,” he tells me. “Early next year we like to be in a position where we can go public if we decide to do so.”
The company now includes some 60,000 restaurants in its network across 14 countries, which include both markets in Western Europe as well as Asia, snagging emerging economies like China and India. Operating brands include Lieferheld, Pizza Portal, Hungry House and Foodik. Delivery Hero says that the eateries in its network collectively generate more than half a billion dollars in sales annually, on some 5 million meals delivered each month. But it is not divulging what that works out to in terms of Delivery Hero’s own revenues.
“Global plans are continue to run very well,” Ostberg says. “We are today leader in most of the markets we operate in.”
The lack of disclosure about the lead investor in this round, you may already know, is not uncommon in Germany. Rocket Internet, the giant incubator founded by the Samwer brothers, regularly announces funding rounds for its startups without divulging the amounts in question.
“We were looking for another investor with strong experience in the public markets, a long-term vision for the industry and the financial wherewithal to invest additional capital when necessary, and found the perfect match,” Ostberg said.
Other investors in the company include Insight Venture Partners, Kite Ventures, Phenomen Ventures, Ru-net, Kreos Capital, Team Europe, WestTech Ventures, Point Nine and Tengelmann Ventures.