T. ROWE PRICE GROUP INC. By Cara Lombardo and Liz Hoffman
DoorDash Inc. is close to securing new funding that would value the largest U.S. meal-delivery company at more than $15 billion before the infusion, as a wave of deal making sweeps over the red-hot industry.
The closely held company plans to sell hundreds of millions of dollars of equity to existing backer T. Rowe Price Group Inc. as well as Fidelity Investments and others, according to people familiar with the matter.
The exact size of the deal and the roster of investors is still being finalized, and the plans could still fall through. SoftBank Group Corp.'s Vision Fund, another existing DoorDash investor, is considering participating, some of the people said.
DoorDash was valued at around $13 billion in 2019, nearly ten times what it fetched a year earlier. Should the San Francisco company manage to seal a deal at an even higher valuation, it would be a sign of the improving outlook for meal-delivery companies in the coronavirus era.
DoorDash filed to go public in February, shortly before the coronavirus upended the economy and financial markets, and is still aiming for a listing this year. The new-issue market has been heating up lately after the pandemic had largely brought it to a halt, with companies including ZoomInfo Technologies Inc. and Warner Music Group Corp. shining in debuts. Raising money from big institutional investors and others ahead of an IPO is an increasingly common tactic to help pave the way for a successful listing.
Neither DoorDash nor its smaller private rival, Postmates Inc., has turned a profit, though DoorDash is expecting its operations to break even in the quarter ending June 30, excluding one-time costs such as those for coronavirus-safety measures, the people said. That is a key consideration for IPO investors who soured on unprofitable IPO candidates like WeWork last year.
Widespread stay-at-home orders in response to the pandemic have boosted demand for food-delivery services but also stretched further the finances of industry players. That has added urgency to calls for dealmaking as a way to shore them up.
Just this week, DoorDash rival Grubhub Inc. struck a $7.3 billion deal to merge with European meal-delivery giant Just Eat Takeaway.com NV after walking away from discussions to combine with Uber Technologies Inc.'s Uber Eats division. The deal, if approved, would create the largest global meal-delivery platform outside of China but do little to consolidate the highly competitive U.S. market.
DoorDash, founded in 2013, controlled nearly half of the U.S. market in April, according to Edison Trends. Its fundraising heft -- it has raised over $2.5 billion, per PitchBook -- helped it offer discounts and enter new markets to overtake Grubhub.
DoorDash has been a bright spot for SoftBank's struggling $100 billion Vision Fund, which owns stakes in dozens of unprofitable tech companies. The fund posted a $17 billion loss in the first quarter, dragged down by some of its biggest investments -- in Uber and Indian hotelier Oyo Hotels & Homes.
Its stable does include some companies that have weathered the pandemic, and even benefited from it, including South Korean e-commerce company Coupang and Bytedance, the parent of Tik-Tok, the video-sharing app whose popularity has soared during lockdown.
Corrie Driebusch contributed to this article.
Write to Cara Lombardo at cara.lombardo@wsj.com and Liz Hoffman at liz.hoffman@wsj.com
