It appears food delivery startup DoorDash won’t be the latest member of the rapidly-expanding “unicorn” club.
The company started fundraising last fall with a goal of hitting the coveted $1 billion mark. But as that latest round of funding draws to a close, it puts DoorDash’s valuation closer to $700 million, the Wall Street Journal reported.
DoorDash brought in more than $110 million from investors including Sequoia Capital, YCombinator and Khosla Ventures, people familiar with the deal told the Journal. Sequoia apparently had a hard time convincing investors to join the round at the proposed $1 billion price.
Investors lately have become wary of “unicorns,” or tech startups with estimated private valuations of $1 billion or more. Market watchers worry some of the mythical creatures have become overvalued and ultimately will turn into “uni-corpses.” As a result, investors are growing more cautious. In the fourth quarter of last year, venture capital investing was down 40.2 percent from the same quarter the year before, George Avalos reported.
DoorDash isn’t the only company feeling the pain. Other startups including Thumbtack, Beepi and Jet.com also recently scaled back their valuation expectations, according to the Journal.
But DoorDash’s problems may be amplified by the plethora of food-delivery startups crowding the market — the company has to compete with rivals including GrubHub, Instacart, Sprig, Munchery and SpoonRocket. Last summer, all that activity led venture capital tracker CB Insights to announce the food-delivery industry is “overcrowded.”
Photo: (Nhat V. Meyer/Bay Area News Group)