Food delivery start-up DoorDash has nearly doubled the company's valuation in six months amid impending IPOs by competitors like Postmates and Uber.
The company announced Thursday it raised $400 million at a $7.1 billion valuation, co-led by Singapore state investment firm Temasek Holdings and Dragoneer Investment Group. The company's existing investors, including the Softbank Vision Fund, DST Global and Sequoia Capital, also participated in the round. The company said its last fund-raising round in August 2018 valued the company at $4 billion.
The funding news coincides with the impending IPOs of competitors Uber and Postmates, both of which have registered with the Securities and Exchange Commission to go public.
DoorDash CEO Tony Xu said in an interview with CNBC the expected IPOs didn't inform the company's funding plans, "because the plans were to double down each of the areas in terms of how we got here. And betting on what's been working."
Those areas in which the company plans to invest the new funds include geographic expansion, signing up more restaurants, increasing its merchant services and investing in its DoorDash Drive product, which allows restaurants to use DoorDash couriers.
DoorDash currently services 3,300 U.S. cities, but Xu said he wants the company to delivery to every zip code in the U.S. and grow its footprint in Canada. Besides UberEats and Postmates, DoorDash's most formidable competitor by market share is GrubHub, which had 43 percent share of monthly sales in January 2019, followed by DoorDash at 31 percent, and UberEats, which had 26 percent, according to Second Measure. However, while GrubHub still dominates the market, its market share is declining while DoorDash says its share has been steadily rising. Since its last funding round in August, 2018, DoorDash says its sales have grown 250 percent, and 325 percent year-to-date. Although the company would not give specific revenue figures.
The food-delivery company has also expanded to grocery delivery, partnering with Walmart last year. In doing so, Xu said his vision of competition has changed.
"Doordash is at the cusp of this evolution moving from the national players and restaurant delivery you know: Grubhub, Uber Eats and DoorDash." Xu said. "I think when you start moving beyond restaurants and think about the logistics, there's a much broader group out there whether it's the Amazons or other folks."
Xu also said the company's focus on growth means it will take longer to become profitable.
"Right now we're choosing to invest in growth and delay profitability for the entire company," Xu said. "But we have the means in which to do that and we know how to get there. But right now we want to accelerate to the number-one position sooner. And we want to serve merchants beyond restaurants earlier, and that's what we're focused on right now."
Correction: An earlier version of this article misstated the number of cities DoorDash serves. It is 3,300.