DoorDash, the food delivery company, announced on Thursday that it has raised $250 million from Coatue Management, DST Global, and several existing investors. The funding values the San Francisco company at $4 billion.
It wasn’t so long ago that DoorDash raised a tidy sum—$535 million from SoftBank, Sequoia Capital, and Singapore’s GIC—in a Series D financing round, so it’s rather surprising that the company is back at it.
That wasn’t part of the plan, CEO Tony Xu told me in a call this afternoon.
“We do have the majority of our Series D money in the bank,” he acknowledged. “This was an opportunistic financing. We’ve had multiple inbound [inquiries]. We were not looking.”
Besides, business is good. The company says its delivery volume is up 250% in June compared to the same time last year, an increase over the 150% year-over-year growth it observed in January. “We’re accelerating our growth, even through we’re a much bigger business now,” Xu said.
Why so much traction? Xu believes DoorDash benefits from the portfolio of restaurants it supports. With Chipotle, Cheesecake Factory, IHOP, and Red Lobster, the executive said, it’s a broader array of major chains than competitors Postmates (which reportedly evaluated a merger with its rival), Caviar, and Munchery. The company’s DashPass subscription program has served DoorDash well, though Xu didn’t share specifics. And its DoorDash Drive program, which caters to the needs of retailers rather than consumers, is “accelerating,” in part due to a partnership with Walmart that’s expanded to 300 stores in 20 states.
In other words, Xu said, it’s because the business model is sound. “We never raised money until we had a proven model,” he said. “We’re seeing success in our milestones earlier and at greater magnitude than ever before. We want that to continue.” When the company raised money in March, it announced a plan to grow from 600 to 1,600 cities; it’s now serving 1,000.
“We didn’t go out for Series D until we were contribution margin-positive,” Xu told me. “We’ve been for six straight quarters.”
He added: “We can turn on profitability whenever we want or need to.”
When Xu appeared onstage at Coins2Day’s Brainstorm Tech conference in Aspen last month, I asked him if he—given all the coin in his company’s coffers—had designs on expanding beyond food to become a broader logistics company that competes with Uber, Amazon, and GrubHub. In light of the new money raised, I asked him again. “If we have an opportunity to do that, we’d love to,” he replied. “It’s still early innings.”
And how might he know when DoorDash is ready to take that step? When the company has “the right people who can be entrepreneurs in these new business lines,” Xu said. The startup added 250 people this year, including chief financial and people officers, bringing its total headcount to more than 700.
Xu seemed to hint that a broader mandate wasn’t far down the road. “Coatue and DST have a great track record: Facebook, Airbnb, Meituan,” he said of his new investors. “They were the first external investors who noticed we were growing faster as we got bigger.”
“And,” he added, “these are investors who have a global perspective and have invested in deliveries across the world.”
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