Deliveroo sees investors lay down $385m in huge funding round

25 Sep 2017

Deliveroo rider. Image: Graphical_Bank/Shutterstock

Deliveroo is preparing to compete with publicly traded rivals such as Just Eat.

Food delivery service Deliveroo was founded in 2013 by Will Shu and Greg Orlowski, and has since become popular among those who want food from a wide array of restaurants delivered to their homes and offices. It operates across 12 countries, including Germany, Ireland, Spain, Singapore and the UK.

According to Business Insider, Deliveroo has just raised $385m in a Series F round. US fund managers T Rowe Price and Fidelity led the round, as well as existing investors in Deliveroo, from Index Ventures to Accel Partners. Total funding for Deliveroo now sits at $860m.

Deliveroo profits jumped 611pc to £129m in 2016 but with that, so did losses, which also reached £129m. The important figure here, though, as TechCrunch reported, is the company’s gross margin percentage, which hit 0.7pc.

Three-pronged expansion plans for Deliveroo

The funds will be used by Deliveroo in three distinct ways.

First, it will expand its Editions programme to see it open delivery-only kitchens for participating restaurants to grow without upfront staffing costs, while optimising delivery times.

The company also wants to expand further across the globe, saying: “This will allow more people to order great food quickly to their door from their favourite local restaurants.”

Thirdly, the company wants to invest in its technology team to work on its logistics and artificial intelligence systems, to help improve delivery times and quantity of deliveries. Deliveroo will also be using data science in the implementation of launching Editions kitchens and figuring out what types of food are in demand in certain areas.

Shu said in a statement: “I remember how excited I was carrying out our first delivery. I hoped that people would love being able to order great food from their favourite local restaurants straight to their front door. I am proud that just four years on, millions of people use Deliveroo in over 150 cities around the world. This is all thanks to the hard work of our riders, the great restaurants that we work with and our brilliant customers.”

Criticism of the gig economy

Although the app is widely used, there has been backlash from workers’ rights organisations as part of a wider critique of the gig economy.

In 2015, more than one-third of workers in the EU were in the irregular, flexible gig economy. As they are seen as self-employed, they don’t have the same rights as a full-time employee in a fixed job.

In July, the BBC reported that Deliveroo said it would pay its workers sickness and injury benefits if the law in the UK was changed, with Reuters reporting yesterday (24 September) that the European Commission wants more protections for gig-economy workers.

In a statement, Deliveroo said: “In short, there is currently a trade-off between flexibility and security, and we want to play our part in overcoming this divide.”

Deliveroo rider. Image: Graphical_Bank/Shutterstock

Ellen Tannam was a journalist with Silicon Republic, covering all manner of business and tech subjects