Deliveroo s £8bn float has to make the tricky economics of food delivery add up
On-demand delivery apps have been plagued by questions about whether growth can overtake losses
9 March 2021 • 6:00am
At the end of last year, the US food delivery app DoorDash joined the ranks of the New York Stock Exchange, pulling off one of the biggest tech floats of 2020.
Investor appetite for the company was insatiable: shares climbed 86pc and the company was valued at around $72bn (£52bn). Sceptics, however, found the demand baffling. DoorDash had never made a profit, even with demand for food delivery at record levels during the pandemic, and as restaurants struggled, there was a growing criticism of the fees it and other delivery apps charged.
Instacart is considering pushing off its IPO until later this year, The Information reported.
Costco accounted for over one-fifth of all Instacart orders in 2020, according to 1010data.
Analysts say Costco demonstrates how Instacart can grow its business even after the pandemic ends.
Instacart is reportedly thinking about waiting to see how much of a swell in pandemic-driven business sticks around before going public.
The Information reported Thursday that the delivery startup is now considering a fourth-quarter IPO, later than the timeline it had previously targeted. The delay would provide investors with a better picture of post-pandemic demand for Instacart s grocery delivery services, according to The Information.
Instacart raised $265 million, it said Tuesday.
The money could go toward lowering fees or adding perks to attract new retailers.
But experts say DoorDash will soon be a strong competitor in the grocery delivery space.
It seems like the sky s the limit for what customers can get delivered from Instacart and for how much capital the company can raise.
The company raised another $265 million from previous backers including Andreessen Horowitz, Sequoia Capital, and D1 Capital Partners, it said Tuesday. The latest round of funding more than doubled its valuation to $39 billion. They continue to be brilliant at raising money, Phil Lempert, a grocery analyst said. And as the company looks to IPO this year, that cash hides a lot of sins, he said.