Amazon leads £475 million funding for Deliveroo, heating up food delivery battle

Amazon led a Series G funding round worth £475 million (about US$575 million) with three other investors for London-based food delivery company Deliveroo.

Deliveroo plans to use the funds to grow its engineering team based in its London headquarters, expand its delivery reach to grow its customer base and create new innovations for the food sector. Two examples Deliveroo mentions are to innovate through delivery-only super kitchens "Editions", as well as new formats that will help restaurants expand to new areas at a lower cost and lower risk. The funding is expected to be completed later this summer.

Andrew Harrer/Bloomberg

"This new investment will help Deliveroo to grow and to offer customers even more choice, tailored to their personal tastes, offer restaurants greater opportunities to grow and expand their businesses, and to create more flexible, well-paid work for riders,” stated William Shu, founder and CEO of Deliveroo in the press release.

Joining Amazon in the Series G round were investors T. Rowe Price, Fidelity Management and Research Company and Greenoaks.

The investment in Deliveroo comes at a time when several companies are investing heavily in the restaurant POS, reservations management and related food delivery businesses. Last year GrubHub paid $390 million to acquire the payments and reward company LevelUp. Also in 2018 Square acquired Dallas-based food delivery company Entrees On-Trays to build on its 2014 acquisition of food delivery company Caviar.

The deal for Deliveroo is part of a broader strategy for Amazon to expand into the food business, including both groceries as well as restaurant food delivery. In 2017 it acquired Whole Foods for $13.7 billion to compete in the grocery store and food delivery markets.

In the U.S. and U.K., Amazon has struggled to gain a significant foothold in food delivery. It launched its U.S. food delivery business in 2015 but has an extremely minor share of the business as four firms control over 90% of the U.S. market — GrubHub, Uber Eats, Doordash and Postmates. Last year, Amazon closed its U.K. food delivery business due to heavy competitive pressure from Deliveroo and Uber Eats.

Deliveroo to-date has received over $1.5 billion in funding from investors. According to Crunchbase, a website that tracks investments in private startups, Deliveroo has conducted eight funding rounds since 2014 and includes major venture capital firms such as Accel and General Catalyst.

Deliveroo was founded by William Shu and Greg Orlowski in 2013 and today works with 80,000 restaurants and 60,000 riders in 500 cities across 14 markets including Australia, Belgium, France, Germany, Hong Kong, Italy, Ireland, the Netherlands, Singapore, Spain, Taiwan, United Arab Emirates, Kuwait and the United Kingdom. Deliveroo does not currently operate in the United States.