SAN FRANCISCO, March 1 (Reuters) - Meal-delivery service DoorDash said on Thursday it had raised $535 million in a funding round led by Japanese conglomerate SoftBank Group Corp , marking the largest financing to date for a U.S. restaurant delivery app.
The financing gives San Francisco-based DoorDash a boost in a crowded field for on-demand food delivery, which includes the likes of Uber Eats, Postmates and Caviar.
It also bucks a global trend of venture capitalists retreating from food-delivery investments amid concern over excessive competition and high valuations for companies that generally are not profitable.
DoorDash declined to offer its valuation, but a person familiar with the matter said the company is now valued at $1.4 billion.
Existing investors Sequoia Capital, GIC and Wellcome Trust joined SoftBank in the round, and the company will add SoftBank’s Jeffrey Housenbold and GIC’s Jeremy Kranz to its board of directors.
The company said it more than doubled its delivery volume last year while boosting gross profits six-fold from 2016 to 2017. This year, it plans to expand to 1,600 cities from 600 and to hire more than 250 people.
U.S. restaurants ranging from fast-food to pricier dine-in establishments continue to show interest in experimenting with on-demand delivery as consumer tastes and demands evolve.
DoorDash says it delivers from ubiquitous restaurant brands such as Wendy’s, Chick-Fil-A, Jack In The Box, The Cheesecake Factory, P.F. Chang’s and Buffalo Wild Wings.
But the meal-delivery space has proved challenging, with a number of startups, such as SpoonRocket, shutting down, and others such as Blue Apron struggling to retain customers.
Global investment in the sector has declined from a peak in 2015, while mergers and acquisitions have jumped, according to data firm CB Insights. DoorDash itself cut its valuation when raising money in 2016.
SoftBank is reshaping the startup financing landscape, investing massive sums of money that often exceed the size of entire venture capital funds.
The firm earlier this year put $300 million into dog-walking app Wag, and notably took a 15 percent stake in Uber Technologies Inc by investing close to $8 billion. (Additional reporting by Lisa Baertlein in Los Angeles Editing by Bernadette Baum)