SoftBank just invested in yet another Uber competitor, only this time in a slightly different market.
Food delivery start-up DoorDash, which goes head to head with Uber Eats, said Thursday it raised $535 million in a funding round led by SoftBank's $100 billion Vision Fund. The deal values DoorDash at about $1.4 billion, according to a person with knowledge of the financing who asked not to be named because the valuation isn't being disclosed.
SoftBank has been pouring money into ride-hailing companies across the globe, recently taking a 15 percent stake in Uber and becoming the largest shareholder. The Japanese conglomerate also owns a piece of Singapore's Grab, India's Ola and Brazil's 99, as well as China's Didi, which acquired Uber's Chinese operations in 2016. SoftBank has also publicly expressed interest in backing Lyft, Uber's biggest U.S. rival.
Fragmented market
DoorDash competes only with a secondary business for Uber — food delivery — but it's clearly a market that Uber is targeting.
In January, Uber acquired a delivery-only restaurant called Ando, and CEO Dara Khosrowshahi said at an event in Munich that Uber will be the "largest food delivery company in the world this year."
But it's a big fragmented market. And investor sentiment in the space is improving after a treacherous period that followed meal kit delivery provider Blue Apron's IPO in June. While Blue Apron remains more than 70 percent below its debut price, GrubHub, a more direct DoorDash competitor, has almost tripled in the past year and is now valued at over $8.5 billion. GrubHub acquired Eat24 from Yelp last year for $288 million.
DoorDash last raised money in 2016, when the company pulled in $127 million. The Wall Street Journal reported at the time that the valuation was $700 million after the company failed to raise funds at its desired $1 billion price tag.
DoorDash CEO Tony Xu told CNBC that the new capital will enable the company to work with more restaurants, invest in technology that lets restaurants integrate the DoorDash technology on their own websites and mobile apps, and expand geographically from 600 to 1,600 cities in the U.S. and Canada this year.
The goal is "to make DoorDash the last-mile logistics platform in every city," Xu said.
Like Uber, DoorDash has its own staff of developers and operations people and employs contractors to deliver food. Xu said there are over 250,000 so-called dashers on the platform. The company plans to grow from 550 employees to about 800 this year, he said.
This Vision Fund's Jeff Housenbold, a director at Grab and Munchery, is joining DoorDash's board. Sequoia Capital, an existing DoorDash backer, and Singapore's GIC also invested in the round.
As for SoftBank's investment in both Uber and DoorDash, Xu put a positive spin on it:
"The best investors always invest in winners in a category," he said.