food delivery
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Readying an IPO, Postmates secures $225M led by private equity firm GPI Capital
Postmates, the popular food delivery service, has raised another $225 million at a valuation of $2.4 billion, the company confirmed to TechCrunch on Thursday, ahead of an imminent initial public offering.
Private equity firm GPI Capital has led the investment, first reported by Forbes, which brings Postmates’ total funding to nearly $1 billion. GPI takes non-controlling stakes — between 2% and 20% — in both late-stage private companies and publicly listed ventures.
After tapping JPMorgan Chase and Bank of America to lead its float, Postmates filed privately with the Securities and Exchange Commission for an IPO earlier this year. Sources familiar with the company’s exit plans say the business intends to publicly unveil its IPO prospectus this month.
To discuss the company’s journey to the public markets and the challenges ahead in the increasingly crowded food delivery space, Postmates co-founder and chief executive officer Bastian Lehmann will join us onstage at TechCrunch Disrupt on Friday October 4th.
As Forbes noted, last-minute financings are critical for companies poised to run out of cash and in need of an infusion prior to hitting the public markets. The motives for Postmates’ last-minute financing are unclear; however, the company will certainly begin trading on the stock market at an interesting time. 2019 has proven to be the year of unicorn listings, and former Silicon Valley darlings like Uber and Lyft have struggled to stabilize since their multi-billion-dollar debuts, despite years of support and coddling from venture capitalists.
Meanwhile, activity in the food delivery space has distracted from Postmates’ prospects. DoorDash, for one, recently purchased another food delivery service, Caviar, from Square in a deal worth $410 million. Uber is said to have considered buying Caviar, which had been looking for a buyer at least since 2016, according to Bloomberg. Postmates, for its part, has long been the subject of M&A rumors.
On-demand food delivery, undeniably popular, has yet to prove its long-term viability as a money-making business. At the very least, a sizeable check from a private equity firm ensures Postmates has the capital it needs, for the time being, to accelerate growth and double down on its autonomous robotic delivery ambitions.
Founded in 2011, Postmates is also backed by Spark Capital, Founders Fund, Uncork Capital, Slow Ventures, Tiger Global, Blackrock and others.
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Starship Technologies CEO Lex Bayer on focus and opportunity in autonomous delivery
Starship Technologies is fresh off a recent $40 million funding round, and the robotics startup finds itself in a much-changed market compared to when it got its start in 2014. Founded by software industry veterans, including Skype and Rdio co-founder Janus Friis, Starship’s focus is entirely on building and commercializing fleets of autonomous sidewalk delivery robots.
Starship invented this category when it debuted, but five years later it’s one of a number of companies looking to deploy what essentially amounts to wheeled, self-driven coolers that can carry small packages and everyday freight, including fresh food, to waiting customers. CEO Lex Bayer, a former sales leader from Airbnb, took over the top spot at Starship last year and is eager to focus the company’s efforts in a drive to take full advantage of its technology and experience lead.
The result is transforming what looked, to all external observers, like a long-tail technology play into a thriving commercial enterprise.
“We want to do 100 universities in the next 24 months, and we’ll do about 25 to 50 robots on each campus,” Bayer said in an interview about his company’s plans for the future.
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Google finance head joins Postmates board ahead of anticipated IPO
Google’s vice president of finance, has joined Postmates’ board of directors, the latest sign that the on-demand food delivery startup is prepping to take the company public.
Postmates announced Friday that Kristin Reinke, vice president of Finance at Google, will join the San Francisco startup as an independent director.
Reinke has been with Google since 2005. Prior to Google, Reinke was at Oracle for eight years. Reinke also serves on the Federal Reserve Bank of San Francisco’s Economic Advisory Council.
Her skill set will come in handy as Postmates creeps towards an IPO.
Earlier this year, the company lined up a $100 million pre-IPO financing that valued the business at $1.85 billion. Postmates is backed by Tiger Global, BlackRock, Spark Capital, Uncork Capital, Founders Fund, Slow Ventures and others. Spark Capital’s Nabeel Hyatt tweeted the news earlier Friday.
Happy to welcome Kristin to the board of @Postmates.
Great times ahead. https://t.co/nEqu3A2YkE
— Nabeel Hyatt (@nabeel) June 28, 2019
“Postmates has established itself as the market leader with a focus on innovation and route efficiency in the fast‐growing on‐demand delivery sector. Given their strong execution, accelerating growth, and financial discipline, they are well positioned for continued market growth across the U.S.,” said Reinke. “I’m thrilled to join the board.”
The startup has been beefing up its executive quiver, most recently hiring Apple veteran and author Ken Kocienda as a principal software engineer at Postmates X, the team building the food delivery company’s semi-autonomous sidewalk rover, Serve.
Kocienda, author of “Creative Selection: Inside Apple’s Design Process During the Golden Age of Steve Jobs,” spent 15 years at Apple focused on human interface design, collaborating with engineers to develop the first iPhone, iPad and Apple Watch.
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Leak reveals Uber’s $9.99 unlimited delivery Eats Pass
What’s the cord-cutting equivalent to ditching your kitchen? Uber’s upcoming subscription to unlimited free food delivery. Uber is preparing to launch the $9.99 per month Uber Eats Pass, according to code hidden in Uber’s Android app.
The subscription would waive Uber’s service fee that’s typically 15% of your order cost. Given that’s often $5 or more, users stand to save a lot if they order in frequently. But Uber could still earn money on menu item markups, cover costs with a flat order fee that protects against someone ordering a single taco, and, most importantly, build loyalty and scale at a time of intense food delivery competition.
The Uber Eats Pass was first spotted by Jane Manchun Wong, the notorious reverse-engineering specialist who’s become a frequent TechCrunch tipster. She managed to generate screenshots from Uber’s Android app code that reveals a prototype of the feature. “Get free delivery, any restaurant, any time,” it says, showing the amount of money you could save or already saved.
An Uber spokesperson did not dispute the legitimacy of the findings and told TechCrunch, “We’re always thinking about new ways to enhance the Eats experience.” They declined to provide further details, which could hint that a launch is imminent but some details are still subject to change. For now we don’t know exactly which perks come with an Eats Pass or where it will be launching first.
At $9.99 per month, the Uber Eats Pass would cost the same and work similarly to Postmates Unlimited and DoorDash DashPass. If they all seem like good deals, you see why they’re less about immediate revenue and more about customer lock-in. You’re a lot less likely to order GrubHub or Caviar if you’ve already pre-paid to cover your Uber Eats delivery costs. And whichever apps emerge from this battle will have instituted the scale and steady behavior to raise prices or just enjoy large lifetime value from each subscriber.
Exploring new business opportunities could help perk up Uber’s share price, which closed at $41.50 today, two weeks after IPOing at an opening price of $42. There are fears that intense competition across both ridesharing and food delivery could make for an expensive road ahead for the newly public company. Any way it can gain an edge on its rivals’ users from straying to them is important. The logistics giant is already experimenting with allowing restaurants to offer discounts in exchange for promoted placement in the app, which is the first step to Uber becoming an ads company, where businesses pay for extra exposure.
If Uber combined Eats Pass with its car service subscription Ride Passes, you have the foundation for a sort of Uber Prime experience — one where you pay an upfront subscription fee that scores you perks and discounts but also makes you likely to spend a lot more on Uber. That bundle could be even more central to Uber than Amazon, which has few direct rivals in the west. People will need to eat and get around for the foreseeable future. Subsidizing loyalty now could be costly in the short-term, but poise Uber for years of lucrative business down the line.
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Singapore’s Grain, a profitable food delivery startup, pulls in $10M for expansion
Cloud kitchens are the big thing in food delivery, with ex-Uber CEO Travis Kalanick’s new business one contender in that space, with Asia, and particularly Southeast Asia, a major focus. Despite the newcomers, a more established startup from Singapore has raised a large bowl of cash to go after regional expansion.
Founded in 2014, Grain specializes in clean food while it takes a different approach to Kalanick’s CloudKitchens or food delivery services like Deliveroo, FoodPanda or GrabFood.
It adopted a cloud kitchen model — utilizing unwanted real estate as kitchens, with delivery services for output — but used it for its own operations. So while CloudKitchens and others rent their space to F&B companies as a cheaper way to make food for their on-demand delivery customers, Grain works with its own chefs, menu and delivery team. A so-called “full stack” model, if you can stand the cliched tech phrase.
Finally, Grain is also profitable. The new round has it shooting for growth — more on that below — but the startup was profitable last year, CEO and co-founder Yi Sung Yong told TechCrunch.
Now it is reaping the rewards of a model that keeps it in control of its product, unlike others that are complicated by a chain that includes the restaurant and a delivery person.
We previously wrote about Grain when it raised a $1.7 million Series A back in 2016, and today it announced a $10 million Series B, which is led by Thailand’s Singha Ventures, the VC arm of the beer brand. A bevy of other investors took part, including Genesis Alternative Ventures, Sass Corp, K2 Global — run by serial investor Ozi Amanat who has backed Impossible Foods, Spotify and Uber among others — FoodXervices and Majuven. Existing investors Openspace Ventures, Raging Bull — from Thai Express founder Ivan Lee — and Cento Ventures participated.
The round includes venture debt, as well as equity, and it is worth noting that the family office of the owners of The Coffee Bean & Tea Leaf — Sassoon Investment Corporation — was involved.
Grain covers individual food as well as buffets in Singapore
Three years is a long gap between the two deals — Openspace and Cento have even rebranded during the intervening period — and the ride has been an eventful one. During those years, Sung said the business had come close to running out of capital before it doubled down on the fundamentals before the precarious runway capital ran out.
In fact, he said, the company — which now has more than 100 staff — was fully prepared to self-sustain.
“We didn’t think of raising a Series B,” he explained in an interview. “Instead, we focused on the business and getting profitable… we thought that we can’t depend entirely on investors.”
And, ladies and gentleman, the irony of that is that VCs very much like a business that can self-sustain — it shows a model is proven — and investing in a startup that doesn’t need capital can be attractive.
Ultimately, though, profitability is seen as sexy today — particularly in the meal space, where countless U.S. startups have shuttered, including Munchery and Sprig — but the focus meant that Grain had to shelve its expansion plans. It then went through soul-searching times in 2017 when a spoilt curry saw 20 customers get food poisoning.
Sung declined to comment directly on that incident, but he said that company today has developed the “infrastructure” to scale its business across the board, and that very much includes quality control.
Grain co-founder and CEO Yi Sung Yong [Image via LinkedIn]
Grain currently delivers “thousands” of meals per day in Singapore, its sole market, with eight-figures in sales per year, he said. Last year, growth was 200 percent, Sung continued, and now is the time to look overseas. With Singha, the Grain CEO said the company has “everything we need to launch in Bangkok.”
Thailand — which Malaysia-based rival Dahamakan picked for its first expansion — is the only new launch on the table, but Sung said that could change.
“If things move faster, we’ll expand to more cities, maybe one per year,” he said. “But we need to get our brand, our food and our service right first.”
One part of that may be securing better deals for raw ingredients and food from suppliers. Grain is expanding its “hub” kitchens — outposts placed strategically around town to serve customers faster — and growing its fleet of trucks, which are retrofitted with warmers and chillers for deliveries to customers.
Grain’s journey is proof that startups in the region will go through trials and tribulations, but being able to bolt down the fundamentals and reduce burn rate is crucial in the event that things go awry. Just look to grocery startup Honestbee, also based in Singapore, for evidence of what happens when costs are allowed to pile up.
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Kiwi’s food delivery bots are rolling out to 12 more colleges
If you’re a student at UC Berkeley, the diminutive rolling robots from Kiwi are probably a familiar sight by now, trundling along with a burrito inside to deliver to a dorm or apartment building. Now students at a dozen more campuses will be able to join this great, lazy future of robotic delivery as Kiwi expands to them with a clever student-run model.
Speaking recently at TechCrunch’s Robotics + AI Session at the Berkeley campus, Kiwi’s Felipe Chavez and Sasha Iatsenia discussed the success of their burgeoning business and the way they planned to take it national.
In case you’re not aware of the Kiwi model, it’s basically this: When you place an order online with a participating restaurant, you have the option of delivery via Kiwi. If you so choose, one of the company’s fleet of knee-high robots with insulated, locking storage compartments will swing by the place, your order is put within, and it brings it to your front door (or as close as it can reasonably get). You can even watch the last bit live from the robot’s perspective as it rolls up to your place.
The robots are what Kiwi calls “semi-autonomous.” This means that although they can navigate most sidewalks and avoid pedestrians, each has a human monitoring it and setting waypoints for it to follow, on average every five seconds. Iatsenia told me that they’d tried going full autonomous and that it worked… most of the time. But most of the time isn’t good enough for a commercial service, so they’ve got humans in the loop. They’re working on improving autonomy, but for now this is how it is.
That the robots are being controlled in some fashion by a team of people in Colombia (from where the co-founders hail) does take a considerable amount of the futurism out of this endeavor, but on reflection it’s kind of a natural evolution of the existing delivery infrastructure. After all, someone has to drive the car that brings you your food, as well. And in reality, most AI is operated or informed directly or indirectly by actual people.
That those drivers are in South America operating multiple vehicles at a time is a technological advance over your average delivery vehicle — though it must be said that there is an unsavory air of offshoring labor to save money on wages. That said, few people shed tears over the wages earned by the Chinese assemblers who put together our smartphones and laptops, or the garbage pickers who separate your poorly sorted recycling. The global labor economy is a complicated one, and the company is making jobs in the place it was at least partly born.
Whatever the method, Kiwi has traction: it’s done more than 35,000 deliveries at an increasing rate since it started two years ago (now up to over 10,000 per month) and the model seems to have proven itself. Customers are happy, they get stuff delivered more than ever once they get the app and there are fewer and fewer incidents where a robot is kicked over or, you know, catches on fire. Notably, the founders said onstage, the community has really adopted the little vehicles, and should one overturn or be otherwise interfered with, it’s often set on its way soon after by a passerby.
Iatsenia and Chavez think the model is ready to push out to other campuses, where a similar effort will have to take place — but rather than do it themselves by raising millions and hiring staff all over the country, they’re trusting the robotics-loving student groups at other universities to help out.
For a small and low-cash startup like Kiwi, it would be risky to overextend by taking on a major round and using that to scale up. They started as robotics enthusiasts looking to bring something like this to their campus, so why can’t they help others do the same?
So the team looked at dozens of universities, narrowing them down by factors important to robotic delivery: layout, density, commercial corridors, demographics and so on. Ultimately they arrived at the following list:
- Northern Illinois University
- University of Oklahoma
- Purdue University
- Texas A&M
- Parsons
- Cornell
- East Tennessee State University
- University of Nebraska-Lincoln
- Stanford
- Harvard
- NYU
- Rutgers
What they’re doing is reaching out to robotics clubs and student groups at those colleges to see who wants to take partial ownership of Kiwi administration out there. Maintenance and deployment would still be handled by Berkeley students, but the student clubs would go through a certification process and then do the local work, like a capsized bot and on-site issues with customers and restaurants.
“We are exploring several options to work with students down the road, including rev share,” Iatsenia told me. “It depends on the campus.”
So far they’ve sent 40 robots to the 12 campuses listed and will be rolling out operations as the programs move forward on their own time. If you’re not one of the unis listed, don’t worry — if this goes the way Kiwi plans, it sounds like you can expect further expansion soon.
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Postmates has launched in 1,000 new cities since December
Postmates is expanding like crazy ahead of an initial public offering expected later this year. The food delivery business has launched in 1,000 new cities since December, the company announced today.
San Francisco-based Postmates now operates its on-demand delivery platform, powered by a network of local gig economy workers, in 3,500 cities across all 50 states. Postmates does not yet operate in any international markets aside from Mexico City.
“We want to enable anyone to have anything delivered on demand and this latest expansion allows us to deliver on that promise across all 50 states in the US,” Postmates co-founder and chief executive officer Bastian Lehmann said in a statement.
The company says it now reaches 70 percent of U.S. households and delivers food from some 500,000 restaurants, helping it to compete with food-delivery powerhouses Uber Eats and DoorDash. Additionally, Postmates recently launched Postmates Party, a new feature that lets customers within the same neighborhood pool their orders.
Postmates is poised to follow Uber into the public markets. The company — which has raised more than $670 million in venture capital funding, including a $100 million pre-IPO financing in January that valued the business at $1.85 billion — filed confidentially for a U.S. IPO in February.
The company completes 5 million deliveries per month and was reportedly expected to record $400 million in revenue in 2018 on food sales of $1.2 billion. Uber Eats, for its part, was expected to begin reaching 70 percent of the U.S. households by the end of 2018 and reportedly has plans in the works to use drones to deliver food by 2021.
DoorDash, meanwhile, is a rocketship. The food delivery company is active in 3,300 cities and claims to be growing 325 percent year-over-year. The company recently closed a $400 million Series F financing at a $7.1 billion valuation. It’s likely to go public in the next year, too.
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Ride-hailing, bike and scooter companies probably raised less money than you thought
Jason Rowley
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Jason Rowley is a venture capital and technology reporter for Crunchbase News.
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After years of fierce competition as private companies, Uber and Lyft are going public on U.S. markets. Scooter service providers, the transportation trend du jour, raised hundreds of millions of dollars to scatter scooters on city sidewalks (to the chagrin of residents and regulators alike) throughout 2017 and 2018. On the other side of the Pacific, Grab and Go-Jek are raising gobs of cash as they continue to scale upward and outward.
Of all the seed, early and late-stage venture funding raised over the past couple of years, how much of the total went to companies in the ride-hailing, food delivery and last-mile transportation categories (which encompasses bikes and scooters)? Probably not as much as you’d think.
Taken together, companies in these sectors raised less than 10 percent of the total venture dollar volume reported for each of the past five full calendar years.
We’ve charted it out based on yearly totals. Take a peek:
To be sure, we’re still talking about a lot of money here. Companies in these three categories raised more than $22 billion in venture funding rounds (not including private equity) in 2017 and more than $18 billion in 2018.
Ventures in the transportation space loom large in the media, and how could they not? It’s a forbiddingly capital-intensive market to play in, requiring companies to raise massive sums, which make for good headlines.
In its early years, competition between on-demand, point-to-point transportation marketplace companies rewarded brashness and speed with early scale and the long-term structural advantages conferred to first the firms which grew the fastest.
But those advantages may not have been as stiff as first expected. Lyft beat Uber to the public markets, raised its valuation during its IPO roadshow, priced at the top of its extended range and then popped 21 percent when it started trading.
That success means that the red chunks of our above chart weren’t all fool’s bets. Instead, a good chunk of the equity represented is now liquid. Of course, there’s a lot more work to do for literally every other ride-hailing, ridesharing, scooter-renting and other wheels-providing unicorns in the world: They still have to go public.
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VCs have growing appetite for ‘AgriFood’
Venture investors are pouring billions of dollars into feeding their hunger for food and agriculture startups. Whether that trend line is due to enthusiasm for the sector or just broader heavy investing in the VC space is much less clear.
According to a recent report published by AgFunder – a VC and investing marketplace focused on the agriculture and food sectors – the “AgriFood” space is booming. Using data from Crunchbase and several other data partners, the organization published its “2018 AgriFood Tech Investing Report” this morning, finding that investment in AgriFood companies increased 43% year-over-year, reaching $16.9 billion in 2018.
AgFunder classifies AgriFood tech as “the small but growing segment of the startup and venture capital universe that’s aiming to improve or disrupt the global food and agriculture industry.” Their definition is intentionally broad, encompassing everything from crop and livestock biotech, property management systems, and payments, to biomaterials and meat alternatives, all the way up to tech platforms for restaurants, grocers, deliveries and at-home cooks.
While some of the AgriFood tech categories – such as delivery or restaurant software – have long been popular destinations for venture capital, we’re now seeing a more diverse array of startups innovating across the entire food supply chain. According to the report, expansion in AgriFood is fairly consistent across upstream (agricultural and farming) subsectors to downstream (more consumer-facing) subsectors, with each group growing roughly 44% and 42% year-over-year respectively.
The data also shows growth occurring across almost all deal stages. AgriFood saw huge increases in the average deal size and total investment for late-stage companies in particular, as venture-backed startups have grown to global scale. And penetrating and attracting capital from international markets seems more feasible than ever. AgriFood investing, which traditionally has been largely US-centric, is rapidly becoming a global phenomenon, with more than half of total funding – and some of the largest rounds – now coming from companies and investors outside the US.
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Asian food delivery startup Chowbus raises $4M
When one food delivery startup fails, another gets funded.
Chowbus, an Asian food ordering platform headquartered in Chicago, has brought in a $4 million “seed” funding led by Greycroft Partners and FJ Labs, with participation from Hyde Park Angels and Fika Ventures. The startup, aware of the challenges that plague startups in this space, says offering exclusive access to restaurants and eliminating service fees sets it apart from big-name competitors like Uber Eats, Grubhub, DoorDash and Postmates.
The Chowbus platform focuses on meals rather than restaurants. While scrolling through the mobile app, a user is connected to various independent restaurants depending on what particular dish they’re seeking. Chowbus says only a small portion of the restaurants on its platform, 15 percent, are also available on Grubhub and Uber Eats.
The app is currently available in Chicago, Boston, New York City, Philadelphia, Champaign, Ill. and Lansing, Mich. With the new investment, which brings Chowbus’ total raised to just over $5 million, the startup will launch in up to 20 additional markets. Eventually, Chowbus says it will expand into other cuisines, too, beginning with Mexican and Italian.
Chowbus was founded in 2016 by chief executive officer Linxin Wen and chief technology officer Suyu Zhang.
“When I first came to the U.S. five years ago, I found most restaurants I really liked [weren’t] on Grubhub nor other major delivery platforms and the delivery fees were quite high,” Wen told TechCrunch. “So I thought, maybe I can build a platform to support these restaurants,”
TechCrunch chatted with Wen and Zhang on Tuesday, the day after Munchery announced it was shutting down its prepared meal delivery business. Naturally, I asked the founders what made them think Chowbus can survive in an already crowded market, dominated by the likes of Uber.
“The central kitchen model doesn’t work; the cost is too high,” Zhang said, referring to Munchery’s business model, which prepared food for its meal service in-house rather than sourcing through local restaurants.
“We don’t own the kitchen or the chef, we just take advantage of the resources and help restaurants make more money,” Wen added. “The food delivery space is really huge and growing so quick.”
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