Gopuff, the startup that's helped kickstart a new category of food delivery in the U.S. — “instant” delivery of essential groceries and other home goods for a flat fee of $1.95, 24 hours a day — has closed a huge tranche of funding to help it scale its service further across the country and globe. It's raised $1 billion in a Series H round that values the Philadelphia-based company at $15 billion.
New backers Blackstone’s Horizons platform, Guggenheim Investments, Hedosophia, and Adage Capital, and previous backers Fidelity Management and Research Company, Softbank Vision Fund 1, Atreides Management, and Eldridge Capital all participated in the round.
This news confirms our scoop of last week, when reported on this Series H as it was still being closed.
Gopuff said it plans to use the funding to continue expanding in North America, the UK (where it has already acquired one company, Fancy, and, sources tell us, is acquiring another, Dija), and Europe; on more hiring; and to continue building out the tech platform that bridges an ecosystem that includes customers, drivers, suppliers and distribution centers.
It currently operates 450 sites across North America and the UK, with includes more than 285 dark stores (or “micro-fulfillment centers” in Gopuff's words), plus more than 185 retailers by way of its acquisition of BevMo earlier this year.
One of the reasons that Gopuff has raised such a large sum is that building out food-based, logistics-fueled, transportation business along all of those parameters is capital-intensive.
But also, that effort to grow is coming amidst a strong surge of competition. Getir out of Turkey, backed by Sequoia and others and most recently valued at $7.5 billion, is also aggressively expanding. And just looking at Europe, there are a wave of others such as Flink, Gorillas, Glovo, Zapp, Cajoo, and Weezy also bulking up their bank accounts to throw their delivery bags into the ring. (In the U.S., established delivery giants like DoorDash will also be moving deeper into Gopuff's territory.)
Gopuff believes it can give all of these and others a run for their money. Founded back in 2013 by Rafael Ilishayev and Yakir Gola — now co-CEOs — while they were still in university to fill a gap they saw in the market for students like themselves, Gopuff has expanded well beyond that by catering to anyone looking for a quick and relatively low-cost way of getting essential goods without physically going out to get those items themselves.
In a stretch of time where many of us were either being ordered by our municipal governments, or acting on our own decisions, to stay in place to curtail the spread of Covid-19, Gopuff's star rose quickly as an easy way of complying without compromising our consumerist tendencies.
But Companies like Getir out of Turkey — which has been around for years also building out a model of “instant” delivery of essential goods — have demonstrated that there is staying power to the concept, and that is what Gopuff is betting on, too.
“Gopuff has quietly built a very strong business and solidified itself as the leading player, continuing to define this evolving category,” said Scott Minerd, Global Chief Investment Officer of Guggenheim Investments, in a statement. “Rafael and Yakir are focused on maintaining fiscal responsibility while having the ability to successfully execute on strategic growth opportunities. This measured approach along with Gopuff’s impressive offering has only just scratched the surface. We are thrilled to support this incredibly strong company and look forward to being part of Gopuff’s journey and continued expansion.”
Part of Gopuff's strategy has been to augment the basic instant delivery of essentials model with more efficient distribution along with a wider vision of what constitutes essentials.
So in addition to building out more localized “dark” stores to more easily distribute goods to customers who buy them, that has included starting “Gopuff kitchens” to make and deliver ready-made food; buying alcohol retailer BevMo for $350 million in November 2020; and acquiring more logistics technology, in the form of buying rideOS for $115 million.
Gopuff itself has been on a fundraising tear to finance all of this. It was only in March that it raised $1.15 billion at an $8.9 billion valuation, which came just months after a $380 million round at a $3.8 billion valuation. Together the three most recent rounds total around $2.5 billion in funding in the space of 10 months, and the idea here seems to be that there may be more of where that came from.
“As Gopuff continues to define the Instant Needs economy, we are thrilled to have new leading global partners onboard, along with the support of our longtime investors. This funding round is further validation of the success of our model and will enable us to continue to do what we do best: deliver an unmatched customer experience,” said Ilishayev in a statement.
“We have truly doubled down on our key business priorities, accelerating our geographic expansion by entering new markets in the US and abroad, innovating for our customers, and continuing to invest heavily in our technology, our people, and our partners. We look forward to continuing to enhance the customer experience and to bring the magic of Gopuff to new customers around the world,” added Yakir Gola.