The latest winner of the SoftBank Group Corp. lottery is DoorDash Inc., a food-delivery app. SoftBank's Vision Fund is leading a $535-million investment in the San Francisco company, almost triple the amount of capital DoorDash had raised in the last five years.
The deal, which includes funding from Sequoia Capital and Singapore's GIC Pte sovereign-wealth fund, values DoorDash at $1.4 billion and gives the company a boost in the highly competitive food-delivery business. Amazon.com Inc., GrubHub Inc., Square Inc. and Uber Technologies Inc., along with a bunch of start-ups, try to attract customers and restaurants to their own delivery apps with discounts and other promotions.
But Tony Xu, DoorDash's co-founder and chief executive, said his real competition is the telephone. Most people still order food by calling a restaurant directly. "We've just scratched the surface, and our investors recognize the incredible opportunity ahead," he said.
The deal introduces potential conflicts for SoftBank. The Japanese firm bought a 15% stake in Uber and took two seats on that company's board in January. A few days later, Uber CEO Dara Khosrowshahi took the stage at a conference to talk up the performance of UberEats. He said growth of the app was exploding and estimated that it would be the largest food-delivery business in the world this year.
SoftBank will appoint Jeffrey Housenbold, a managing partner, to DoorDash's board. (Different SoftBank representatives sit on Uber's board.) Jeremy Kranz, head of technology investing at GIC, will also become a director at DoorDash.
With the new funding, Xu plans to hire 250 employees on top of the 550 DoorDash has now and add restaurants in 1,000 U.S. and Canadian cities to the 600 it has today. He said DoorDash will expand internationally this year, though he declined to say where.