Just two weeks after reaching a $1 billion valuation on the back of a major acquisition, Berlin-based online food ordering and delivery site Delivery Hero has yet more news: the company has raised another $350 million in finanacing. This brings the total amount raised this year alone by Delivery Hero to $520 million, and the overall total raised to $635 million.
Delivery Hero says it is the highest-ever round of financing raised by a food delivery company to date. Suddenly, Rocket Internet’s typically supersized funding rounds seem very regular: FoodPanda raised $60 million in August.
We have reached out to Delivery Hero to ask whether this latest round of financing was made at the same valuation, or if it’s creeped up higher. They have yet to answer but we’ve heard that the large, publicly-listed food delivery companies are a good a point of comparison. UK-based Just-Eat, which went public earlier this year, is currently valued at $2.71 billion (£1.65 billion). U.S.-based Grubhub, meanwhile, is valued at $3.21 billion.
This latest round was led by existing investors Insight Venture Partners and Kite Ventures, and also includes the backing of a new party, the Swedish investment company Vostok Nafta, which has invested in a number of Russian companies like Avito, GetTaxi and Yell.ru. Delivery Hero says the money will be used to “invest in existing markets” — naming specifically the UK and Germany in a statement on the new round.
It’s unclear if the focus will be on organic growth or more acquisitions along the lines of Pizza.de, the German rival that Delivery Hero gobbled up only weeks ago.
I wonder if we will be seeing more acquisitions, given that food delivery is a relatively mature market that is ripe (excuse the pun) for more consolidation. “In a few of our markets we haven’t reached market leadership yet and we will use this investment to achieve our goal of becoming the clear number one in each market we operate in,” CEO Niklas Östberg, said in a statement.
What this mammoth round shows is that, while there may be some concern that tech startups in Europe may find it harder to raise money in light of the shrinking economies in certain European markets, the door remains open for those demonstrating growth and innovation.
The new funding will also help Delivery Hero stave off any immediate need to raise money through the public markets right away. There may be some logic to that: with Zalando, Alibaba and Rocket Internet all potentially listing soon, and food delivery compatriots Just-Eat and Grubhub already public, there is a question mark over whether investors would want to sustain yet another e-commerce listing like Delivery Hero at the moment, in which case waiting at least until 2015 and raising privately makes more sense.
That’s not to say that the IPO will not come. “We still aim to be IPO ready in the course of next year,” Östberg told me a couple of weeks ago, “with IPO as an option to choose from.”
Delivery Hero says it’s growing at 100% year on year at the moment, with restaurants generating over $1 billion in annual sales, with 10 million meals ordered on average every month. Its ordering and delivery network currently covers around 75,000 restaurants across 23 countries and five continents.
It’s an interesting sign that for this very large, late round, Delivery Hero has included an investor that has made some of its most significant investments in Russia — a sign, perhaps, of markets where Delivery Hero also hopes to develop more business, or of the investor looking for more traction in the markets where Delivery Hero is established?
“We warmly welcome Vostok Nafta as a new investor and at the same time we continue to appreciate the overwhelming trust our existing investors have in our business,” Östberg said.