Is that DoorDash or a unicorn at my door? Both!

The front stoop, especially here in the food-delivery-startup-obsessed San Francisco Bay Area, is getting awfully crowded.

With the ability to now order meals of all kinds in a matter of minutes from our home, we now face the distinct possibility of having not just a gourmet three-course meal delivered to us, but also an organic feast, a vegetarian spread, a real-life chef ready to whip something up for special just for you, a fast-food burger or bucket of chicken fingers and, who knows, maybe a specially created canine dish for Fido.

It’s that crazy. And now the crowded food-delivery space is heating up ever more.

And, says Bloomberg, the players include a newly minted “unicorn,” the term for a startup valued at a billion or more dollars:

Just eight months after raising $40 million from venture capitalists, DoorDash is making another run. The San Francisco food delivery startup is in talks to raise financing at a valuation of at least $1 billion, said people with knowledge of the matter.

Sequoia Capital, which is already an investor in DoorDash, is expected to lead the upcoming round, said the people, who asked not to be named because the discussions are private. The talks with DoorDash, which sends its couriers to restaurants to pick up and deliver customers’ orders, are ongoing, and it’s unclear how much the startup plans to raise.

The VC crowd along Sand Hill Road is going ga-ga over go-go grub. As industry blog Food World News points out, the front door is the new interface between VC-backed entrepreneurs hoping to strike it rich and the deep-pocketed investors who want a piece of the hand-delivered pie:

Food Delivery is expected to be one of the biggest battle grounds in the industry in the coming months with DoorDash and similar players like PostMates, InstaCart, and Grub Hub duking it out with tech giants like Amazon, Uber, and Google. In their analysis of the hottest food trends of 2016, food and beverage consultants Baum & Whiteman named food delivery as the biggest thing to look out for in the New Year.

“Tech-driven delivery is 2015-2016’s Big Disrupter of food retailing and food service. Aimed at the ultimate consumer convenience, food brought quickly to homes, offices and (why not?) hotel guests. Delivery affects everyone from McDonald’s to your favorite white tablecloth emporium.”

Examples abound of this food frenzy about to blow up into a full-fledged foot fight. There’s Postmates, which recently raised $80 million. Car-booking Uber has launched lunch delivery in a dozen cities. Throw in Munchery, SpoonRocket, Sprig and others and pretty soon you’ll have no room to leave your umbrella on your front porch, says the Bloomberg post:

The market for food delivery via app is “overcrowded,” research firm CB Insights declared recently. A third of all U.S. food delivery companies in operation today raised their first round of funding in the past year, CB Insights said in June. Many investors, undeterred by the crowds, are racing to separate the winners from also-rans. Some are drawn by the prospect that their picks will gain the attention of a buyer.

Food delivery companies have been attractive acquisition targets. Restaurant review site Yelp acquired Eat24 in February, and Square, the newly public payments provider, bought startups Caviar and Fastbite in the past year or so. Seamless.com owner GrubHub, which held an initial public offering last year, is one of the largest U.S. food delivery companies, valued at $2.2 billion.

In addition to DoorDash, Sequoia is a backer of Instacart, a grocery delivery service, and Good Eggs, which works with farmers to source fresh produce for delivery.

And don’t even get us started with Taco Bell and Dunkin’ Donuts, fast-food behemoths who have teamed up with DoorDash to, yup, bring it on home to you.

Ding dong.

Sorry, someone’s at the door.

Photo by Nhat V. Meyer/Bay Area News Group

 

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  • Nelrod

    Funding these companies, particularly to the tune of a billion dollar valuation, is a fool’s errand. If the VCs cannot see that simple delivery, vs. the truly significant talent of actually being able to make and serve good food, is not worth investing in, then we are clearly at the point where this bubble looks just like the 1999/2000 bubble. Idiotic business plans for companies that fail at the relatively simple task they propose to do – and DoorDash has a crap record of delivering to me that LOSES MONEY and Munchery is hardly better (same can be said for Eat24, GrubHub and all the others) – do not deserve even the most cursory review, much less funding, by the Sand Hill road crowd.

    That said, hey, I’ll continue to use them because they lose money with every delivery. That means that I’m even more the beneficiary of their generous business model as I get signficant credit to my account every time they fail…which is often.

 
 
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