With Just Eat’s recent multibillion dollar IPO, along with heavy competition from Rocket Internet’s FoodPanda, and heavily-backed Delivery Hero, you’d be forgiven for thinking the online take-out delivery platform space was sewn up in the UK and Europe. But actually, online food delivery remains a fertile market.
A number of startups have cropped up which are attempting to reach parts of the market the likes of Just Eat don’t really cater for yet. Namely, in the case of Deliveroo, food delivery from premium restaurants that don’t traditionally offer a take-out service.
Today the London-based company has closed a £2.7 million series A round led by Index Ventures, with participation from new VC kid on the block, Hoxton Ventures, along with a number of individual investors. The Index connection perhaps shouldn’t come as surprise. Deliveroo’s Leonard Picardo was previously at the London-based VC firm, and is sometimes considered as a co-founder, though technically he joined after the startup was founded by William Shu and Greg Orlowski.
Currently operating in London only, Deliveroo solves the problem that a lot of take-out food does’t really cut it, and yet most premium or higher-end restaurants don’t deliver to homes or businesses. To do this, it’s built its own online ordering and logistics platform, including recruiting a fleet of drivers.
It’s the latter element that really differentiates it from the Just Eat model, which relies on the take-outs themselves to actually handle delivery. This means, in theory, not only can Deliveroo expand the type of restaurants that deliver, but also maintain more control over customer service because it can vet and train drivers direct.
Restaurants on the Deliveroo platform include Brindisa, Busaba Eathai, Carluccio’s, Cay Tre, Goodlife Diner, Gourmet Burger Kitchen, Princi, Rossopomodoro and Tommi’s Burgers.
With the new funding, Deliveroo says it plans to further strengthen its logistics technologies and delivery platform, and of course, expand to other parts of the UK and Europe, including opening its first international office later this year. Along with Index and Hoxton Ventures, other investors in this round include JamJar Investments, Greg Marsh (founder of One Fine Stay), and Arnaud Bertrand (founder of HouseTrip).
A direct competitor in the UK is Meals.co.uk, which launched first in Bristol, but also operates in London. It’s backed and advised by David Pritchard (former CEO, OpenTable Europe), Chris Nixon (former MD, TravelSupermarket.com), and Doug Scott.
What’s interesting about the model both Deliveroo and Meals.co.uk are employing is that it has an obvious exit strategy on a plate. As one investor who knows the space well put it to me recently, “The game is simply do the stuff Just Eat do not do. Then, when they have users, do Just Eat’s model. Then sell to Just Eat as a threat.”