Curated food delivery startup Caviar is in talks to be acquired by Square in a deal that could be worth at least $100 million, according to several sources. While we’ve heard the deal is slated to take place over the next couple of weeks, these things could always fall apart.
Caviar is one of many new startups that seeks to enable customers to order meals online and have them delivered in a short period of time. It differentiates by striking exclusive delivery deals with high-quality restaurants, and also by offering a group-ordering feature so that customers can have their family and coworkers add their own meal selections simply by sharing a link.
Launching first in San Francisco, the service is now available in other major markets, including New York City, Boston, Chicago, Seattle, and Washington, D.C.
We’ve seen a lot of investment go into the food delivery space over the last several months, with Caviar being one of the beneficiaries of that funding. The company raised a $13 million Series A round led by Tiger Global just this April. It had previously secured $2 million in seed funding prior to that, with investors that included Winklevoss Capital and Andreessen Horowitz, among others.
But it hasn’t been alone: Investors have poured funding into a wide range of on-demand food delivery services of late. In recent months, we’ve seen Munchery raise $28 million, Postmates raise $16 million, and Spoonrocket and Sprig each raise about $10 million.
All that competition could be part of the reason for what seems like an early exit for the company. While it seems strange Caviar would seek to be acquired so soon after raising funding, it’s possible that the competitive environment is just too much for it to handle, and maybe it would do better to be part of a larger company.
Payment processing company Square launched Square Order in May to bite into the food delivery service industry. There have been speculations as to whether the technology was built in-house or was part of another acquisition or third party.
Currently, Square Order offers a mobile app for consumers to order food for takeout. But it requires the consumer to pick up their own order. Caviar, by contrast, handles all pickup and delivery for the restaurants it partners with, lowering the fixed costs associated with delivery and could provide a big value-add to potential Square restaurant partners.