Amazon leads $575 million investment round for food delivery company Deliveroo

Amazon leads $575 million investment round for food delivery company Deliveroo

Handout: Deliveroo 1 180424 ASIA

Amazon is leading a $575 million funding round for Deliveroo, taking the total the food delivery app has raised to date up to $1.53 billion.

Others taking part in the funding round include existing investors T. Rowe Price, Fidelity Management, and Greenoaks.

Deliveroo is a British company that allows users to order food deliveries from nearby restaurants using an app. Its U.K. rivals include Uber Eats and Just Eat, but the firm operates across 14 markets including Australia, Germany, Hong Kong and the UAE.

Deliveroo said in a press release Friday that it would use the funding to grow its engineering team in its London headquarters and expand its delivery reach to offer its service to new customers. Will Shu, founder and CEO of Deliveroo, said in the press release that the new investment would offer restaurants new opportunities to grow and expand their businesses.

“Amazon has been an inspiration to me personally and to the company, and we look forward to working with such a customer-obsessed organization,” he said. “This is great news for the tech and restaurant sectors, and it will help to create jobs in all of the countries in which we operate.”

In December, Deliveroo, which grew by 116% globally in 2017, opened its first brick-and-mortar restaurant in Hong Kong. Deliveroo Food Market serves as a kitchen for delivering online orders as well as a consumer-facing storefront where consumers can choose from 15 dining concepts.

At the time, the company said it would expand the concept globally if all goes well, but it already had plans to open a second location in Singapore this year.

British newspaper The Daily Telegraph reported late last year that Deliveroo is eyeing a 2020 IPO, quashing rumors that a takeover deal from Uber was in the works.

 

Seema Shah, global investment strategist at Principal Global Investors, told CNBC’s “Squawk Box Europe” on Friday that services like Deliveroo – which “technified” traditional industries – had significant long-term potential.

“The problem that they face is that there’s so many competitors coming in – all of these large tech companies are developing other technologies that can enable them to do similar stuff, so I think it’s going to be tough going forward,” she said. “But there’s so much interest, especially when you think about the millennial contingent that’s coming through – that’s the only way that they’re going to be operating.”

However, Deliveroo has faced similar issues to Uber when it comes to sentiment among its employees. In June last year, a group of 50 U.K. workers won a six-figure payout from the firm in a settlement of an employment rights claim. The claim alleged the riders were denied rights such as the legal minimum wage after being given contractor status instead of classified as employees.

In December, the tide turned in Deliveroo’s favor when it won a case in Britain’s High Court, which rejected claims that categorizing riders as self-employed breached their human rights.

[“source=cnbc”]