Over the past couple of weeks both DoorDash and London based food delivery company Deliveroo announced substantial funding rounds.
Amazon led a $575 million funding round in Deliveroo and DoorDash is raising a new round of financing that could value the company at as much as $13 billion.
This is up from a $7.1 billion valuation DoorDash got in February when it raised $400 million and almost 10x it's valuation in early 2018.
Given what many say are lackluster IPO's by Lyft and Uber, these are impressive fund raising rounds.
There's 2 key reasons food delivery is considered a big opportunity and attracting these investments.
First, the potential is huge and the market is rapidly growing. Key quote from Manhattan Venture's research report on Postmates, which is yet another food deliver company:
The current U.S. food delivery market is estimated to be around $30 billion and will likely grow to $365 billion or more by 2030. Food delivery is a small fraction (5% to 10%, depending on ranking criteria) of the overall restaurant sales and is set to grow at a CAGR of roughly 20%.
Second, investors believe food delivery business models can be profitable. This is confirmed by food delivery firm Grub Hub's financial performance. It's been a profitable, public company for several years.
Amazon's renewed interest in this space - Amazon Restaurants pulled out of the U.K. last year and is only available in a limited number of U.S. cities - is worth watching. It's clear they see the delivery of anything and everything as within their target market.
But the consensus among investors so far is food delivery is a big enough market with room for multiple players to be successful.
Comments