In the pandemic economy, third-party delivery services have played a critical role in helping propel the food industry. DoorDash is one of the companies leading the charge. As the company heads toward its market debut, here’s what to know about the DoorDash IPO, including fundraising that’s led up to this point and when to expect the DoorDash IPO date.
TL;DR
- DoorDash founders include Tony Xu, Evan Moore, Andy Fang, and Stanley Tang. The four Stanford grads founded the company in 2013.
- The company’s most recent funding round came in June 2020, when they brought in $400 million.
- Investors can expect the DoorDash IPO date before the end of the year.
- The company is selling 33 million shares at a rate of $75$85 each.
- DoorDash will trade on the NYSE under the ticker symbol “DASH”.
- As of October 2020, DoorDash held a 51% market share for meal delivery
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A brief DoorDash company history
Tony Xu was born in China to parents who worked as a doctor and professor. At age five, his family packed up and moved to the US. His dad went on to get a PhD in aeronautical engineering while his mom worked numerous jobs (including as a restaurant server) until she was able to open up a medical clinic in the country. While Xu grew up in Illinois, him and his family eventually moved to San Francisco.
Related: Find more stocks by immigrant founders on our themes page
Xu completed his undergraduate degree at the University of California, Berkeley. He graduated with a Bachelor’s in Industrial Engineering and Operations Researchnot a far fall from his dad’s career. For grad school, Xu attended Stanford’s Graduate School of Business. That’s where he met Evan Moore, one of the DoorDash co-founders.
Xu and Moore both graduated from Stanford in 2013. That’s when they teamed up with Andy Fang and Stanley Tang. At the time, Fang and Tang were computer science students still in their junior year. Together, the four decided to start an app that could help restaurants (especially small, local restaurants) through a third-party delivery service.
The quartet of DoorDash founders officially brought the company to fruition in 2013. At first, they called the company Palo Alto Delivery. They delivered food all across the Stanford campus. Over time, they changed their name, hired drivers, partnered with restaurants, and developed their complex dispatch software.
Take a step back in time by reading DoorDash’s very own founding story, published on Medium in 2013.
Today, Tang leads consumer engineering. Fang spearheads DoorDash Labs. Xu maintains his role as the company’s CEO. Moore has gone on to become a Partner at Khosla Ventures, a firm that has invested in DoorDash (Moore has also had a hand in founding Opendoor and Vevo).
DoorDash has also acquired three subsidiary companies:
- Caviar: DoorDash acquired Caviar on August 1, 2019. Caviar is a food delivery service that specializes in upscale urban-area restaurants. Due to exclusivity, these types of restaurants don’t typically offer delivery services. Caviar fills the gap.
Prior to the DoorDash purchase, Square owned Caviar. DoorDash purchased the company for $410 million. While the two companies are technically competitors, Caviar is zoomed in on its niche. This makes it a complementary acquisition for a company like DoorDash.
- Scotty Labs, Inc: During the same month as the Caviar acquisition, DoorDash went ahead and purchased Scotty Labs. While we don’t know how much money the deal entailed, we do know that Scotty Labs was a tele-operations startup with an eye for self-driving and remote-controlled vehicle tech. It’s likely been turned into the DoorDash Labs that Fang leads today.
- Rickshaw: DoorDash acquired Rickshaw in 2017. Rickshaw started out as a delivery and logistics software company. DoorDash integrated the technology into their own software system to help them develop a more robust, complex platform. The purchase price remains undisclosed.
It’s not just food DoorDash is delivering, either. They’ve partnered up with companies like Walmart, Mercato, and Walgreens to help make grocery and convenience store delivery a part of the new norm.
DoorDash fundraising
DoorDash has had numerous successful fundraising efforts. Here are the most noteworthy:
- Series A: In May 2014, DoorDash earned $17.3 million. Some of this came from Ted Zagat, heir of the Zagat Survey founders. After this round, DoorDash achieved a valuation of $73.5 million.
- Series B: In March 2015, the company raised $40 million. Investors included Sequoia, Khosla, Kleiner Perkins Caufield & Byers, and Charles River Ventures.
- Series D: In March 2018, DoorDash had their largest fundraising round ever. Ity brought in $535 million. SoftBank led the charge along with GIC and Wellcome Trust.
- Series H: In June 2020, DoorDash had one last fundraising round before embarking on their IPO. This Series H round helped them acquire $400 million from various institutional investors. Afterward, DoorDash earned a $16 billion valuation.
Today, DoorDash enjoys backing from some hefty names in the venture capital world. Namely, they partner with SoftBank Vision Fund, Sequoia, and even the Singaporean government’s private equity arm.
Path to the DoorDash IPO
As of 2020, DoorDash has been in business for seven years. So what has the company been up to?
For one, their platform helps deliver meals to 18 million consumers each month, all of which come from 390,000 restaurants and merchants.
Initially, DoorDash had filed their IPO paperwork with the SEC on a confidential basis. This is a pretty common move (we’ve seen it with companies like Airbnb and Asana, just to name a couple). However, they made their filing public on Monday, November 30, 2020.
For the IPO process, DoorDash has enlisted the help of two prominent underwriters: Goldman Sachs and J.P. Morgan. In a firm agreement, underwriters set the terms for the IPO (including the number of shares and price per share), back the deal, and help court investors. In short, they’re in it to help everyone reap the rewards of a successful IPO.
Next steps for the DoorDash IPO
According to the company’s registration statement, they’re planning on listing 33 million shares at a rate of $75$85 each.
The DoorDash IPO will do more than simply benefit the company. Xu and his co-founders can expect to leap into billionaire status following the offering. Thanks to his 4.6% stake, Xu’s net worth in particular will hit just above the $1 billion mark, and that’s at the low end of the share price range. Co-founders Fang and Tang each have a 4.2% stake in the company and can also expect to become billionaires following the IPO.
Now, with the details of the IPO made public, DoorDash’s $16 billion valuation is bumping up a notch, ranging anywhere from $23$32 billion.
When is the DoorDash IPO date?
Investors can likely expect the DoorDash IPO by the end of the year. Upon its market debut, you can find the DoorDash IPO on the New York Stock Exchange (NYSE) under the ticker symbol “DASH”.
Whatever the DoorDash IPO date may be, one thing is for certain. The $2.8 billion they’re looking to raise is no small feat.
Investors will be able to purchase DoorDash stock in three different classes:
- Class A common stock provides voting power of one vote per share. (FYI, shareholders can vote at DoorDash’s annual meeting.)
- Class B shares provide shareholders with 20 votes per share.
- Class C shares do not provide any voting rights. This will be the most common for investors in the general public.
As the DoorDash IPO date nears, so too do long-awaited market debuts from other companies. This includes Airbnb, Roblox, and Wishall of whom are expected to go public before ringing in the new year.
What investors should know
Numbers can be deceiving. In the year ending September 30, 2020, DoorDash earned $1.9 billion in revenue. That’s more than twice the revenue from the same period in 2019, which hit just $587 million. Despite this impressive statistic, it’s worth noting that DoorDash has yet to reap a profit.
From JanuarySeptember 2020, DoorDash actually experienced a net loss of $149 million. On the plus side, this is a huge improvement from the $667 million they lost over the entire course of 2019. However, it’s still a lossand one that investors should be aware of before they lend their hard-earned capital.
All things considered, DoorDash does hold a 51% market share for the food delivery industry as of October. Competitors include GrubHub (which Just Eat Takeaway.com acquired for $7.3 billion) and Postmates (which Uber bought back in June for $2.65 billion). Uber Eats and GrubHub only hold a 23% and 18% market share, respectively. Toward the end of November 2020, GrubHub had a market capitalization of approximately $6.5 billiona lot less than DoorDash’s valuation.
Image Source: Second Measure
Interested investors can view the DoorDash form S-1, or registration statement with the SEC, for more information.
Related: Find more food delivery stocks on our themes page
Bottom line
The DoorDash IPO has been long in the making. Xu has admittedly had his eye on an initial public offering for years. Because of the food industry’s shift toward takeout and delivery since the start of the COVID-19 pandemic, it’s no wonder Xu and his team chose this year to dive in headfirst. And it’s not just DoorDash that has done thiswith companies like Poshmark, Snowflake, and Palantir having gone public, 2020 is the year of the IPO. Will next year be able to compete?