Food delivery start-up DoorDash nearly triples its value in about 5 months to $4 billion
- DoorDash, in its latest funding effort, raises $250 million after the 5-year-old San Francisco-based start-up in March raised $535 million.
- DoorDash CEO Tony Xu says he plans to use the money to work toward serving every city in the U.S. and Canada and adding more restaurants.
- DoorDash, which competes with GrubHub, Uber Eats and Postmates, is not yet profitable.
DoorDash, in its latest funding effort, has raised $250 million, valuing the food delivery service at $4 billion.
The latest round — announced Thursday and led by tech investment firms Coatue Management and DST Global — came after the 5-year-old San Francisco-based start-up in March raised $535 million.
That round was led by SoftBank's $100 billion Vision Fund at just a $1.4 billion valuation.
DoorDash, which competes with GrubHub, Uber Eats and Postmates, has raised nearly $1 billion overall.
Tony Xu, co-founder and CEO of DoorDash, told CNBC on Friday that he plans to use that new money to work toward serving every city in the U.S. and Canada and getting more restaurants on board.
In the March capital raise, he had said he hoped to be in 1,600 cities by year-end.
In Friday's "Squawk Box" interview, he said, "We're actually ahead of target and we'll be ending the year closer to 2,000 cities."
Xu said he's also focused on "adding to the restaurant selection," highlighting deals this year with Wendys, Chipotle, Dine Brands' IHOP, Red Lobster, White Castle and Cheesecake Factory.
DoorDash overall is not yet profitable.
"As a company, we are contribution margin positive. We've been that way for six straight quarters now, which means we pay off all of our variable expenses and all that's left are the fixed costs," Xu said.
"We are profitable in our earliest markets," he added.
The average delivery fee at DoorDash is a little less than $5, plus any tip the customer may give. The company also reportedly takes about a 20 percent commission fee from the restaurants.
Xu sees a business opportunity in its infancy at large chains and other restaurants that haven't traditionally provided delivery.
"Only 6 percent of restaurant sales are delivered if you exclude pizza. Pizza today is half of delivery. Forty years ago, pizza was only 4 percent delivered," he said. "If you think about the future trajectory of ... nonpizza, many of these establishments that DoorDash has built relationships with, this is very, very early days."
In addition to partnerships with restaurants, DoorDash also forged a grocery delivery deal with Walmart, which expanded to nearly 300 stores, in 20 states, in the last four months.