Raising Finance

Deliveroo valued at £1.5bn after expansion plans trigger funding round

3 min read

25 September 2017

Deliveroo may have faced some heavy losses of late, but it ploughed on with its fundraising endeavour, securing itself the title of fastest-growing tech business in the UK.

The reputation of delivery business Deliveroo took a hit after it was involved in the gig economy debate. It led to the company offering sick pay, concluding that UK law should be amended so that those working flexibly could gain extra benefits.

Its changes, however, didn’t prevent the uproar that went alongside discovering that founder Will Shu gave himself a 22.5 per cent pay rise during that time – a period of which, the Guardian concluded, over £1.5m was being spent on legal fees.

The BBC also reported that the company was suffering due to “the cost of getting goods to customers.” Indeed, while it racked in £128.56m overall, £127.47m went into the delivering of food, not leaving it with much of a profit.

The report is a little out of date now, but either way, none of the above have prevented Deliveroo’s expansion plans – the company experienced an influx of riders. Its resultant fundraising mission now also makes it the fastest-growing tech company in the UK, with a valuation of £1.5bn.

On the topic, Shu said: “I remember how excited I was carrying out our first delivery. I hoped that people would love being able to get food from their favourite local restaurants delivered straight to their front door.

“I am proud that just four years on, millions of people use Deliveroo in over 150 cities around the world. This is all thanks to the hard work of our riders, the great restaurants that we work with and our brilliant customers. So I am extremely pleased that our new investors share this vision and have decided to make such a significant investment in our future.”

Led by T. Rowe Price Associates, Inc. and Fidelity Management & Research Company, the previous backers of Facebook, AirBnB and Tesla, Deliveroo managed to raise $385m, the majority of which will be placed on three specific areas.

It will be placing emphasis on the creation of “delivery-only” kitchens in the hope of improving delivery time and increasing customer food options in a way that doesn’t maximise upfront costs to partner restaurants.

More options come in the form of adding new towns and countries to the Deliveroo availability list.

Technology is the third area of investment, with Deliveroo seeking to improve artificial intelligence systems and real-time logistics algorthims.

“This investment will take us to the next level,” Shu further added. “It will allow our riders to deliver more great food directly to people’s doors.”