Deliveroo, a UK based food delivery company, has announced that it has raised $70 million in a series C funding round. This comes after it raised $25 million in a Series B funding in January. This funding round was led by Greenoaks Capital and Index Ventures, with Accel and Hoxton Ventures also participating.
Deliveroo’s main premise is that it delivers food from high end restaurants that do not operate their own delivery services, or restaurants that do not have the tech background to run a delivery service. The idea was born from the experiences of William Shu, Deliveroo’s co-founder, who, when working for Morgan Stanley in London, was unable to find satisfying meal delivery services in the financial district.
“I ended up having to go to Burger King because no one would deliver,” he said to the New York Times blog. “Where I worked, it was impossible to find anything good to eat,” he added. He left his job, pursued and received an MBA from Wharton School and returned to set up Deliveroo.
“For the first eight months, I was on my bike a lot,” said Shu to the NYT blog, recalling the beginning of the company. Till date, Shu still clocks in a couple of hours in delivery to better understand logistics and the customer base.
A Marketing Push
Till date, Deliveroo has had a fairy small budget for marketing; it instead relies on word of mouth and locally advertising. With the new funding, Shu confirms that marketing will become slightly more aggressive. For instance, you may see more ads for Deliveroo popping up on online channels, billboards and possibly even television advertising.
These advertisements will help customers better understand the brand. As well as allowing customers to order from otherwise non accessible restaurants in terms of delivery, Deliveroo collaborates with restaurants to help with food packaging and other logistics that involve delivery. It charges a flat amount for delivery and also takes a percentage from restaurant sales. When placing orders, it also allows customers the option to add on a driver tip.
Steps to Success
As consumers become more aware of the service, its customer base will naturally go up. Indeed, Deliveroo’s customer base has already gone up 500% since the funding in January. In response to this growth, it will channel some of the funding into technical development, with a focus on improving logistics to take care of the nitty gritties of delivery, such as ensuring that food doesn’t get cold and that delivery personnel are timely and efficient.
Deliveroo will also use the funding to expand its geographical reach. While it was founded in London, it expanded into France, Germany and Ireland this year. It is now looking at moving into other European cities, the Middle East and small segments of Asia. “Our sweet spot is when there’s high population density, a degree of affluence and a lot of restaurants,” said Shu to the NYT blog with refrences to target locations.
A final outcome of the funding is that the Greenoaks Capital managing partner, Benny Peretz, will join the board of Deliveroo.