DoorDash Down Round Shows Delivery Doom And Gloom

The much ballyhooed unicorn status may be harder to come by these days.

Indeed, the $1 billion valuation threshold is elusive for at least one company, DoorDash, a food delivery player competing in a crowded field.

The Wall Street Journal reported last week that the company has been looking to join the unicorn ranks but “may have to settle for much less” in a sign that caution is reigning in the venture capital world.

The struggle began, according to WSJ, after DoorDash investor Sequoia Capital notified the firm at the end of 2015 that it would invest as much as $40 million — tied to a $100 million investment round — that would value the startup at $1 billion.

But the financial publication, citing unnamed “people familiar” with these developments, said that the company and Sequoia have been having a tough time finding investors to come on board at that valuation level. The company, according to WSJ, is now looking to garner investments at levels more akin to an earlier funding round, which came in at a $600 million valuation. The latest round has not been finalized. And a company spokesperson told WSJ that the latest valuation round will indeed trump prior levels. A total of $60 million has been raised to date.

In discussing the competitive environment, WSJ stated that DoorDash competes among a “large stable” of smartphone-driven food delivery companies. The key is to show black ink at the bottom line, which has, for many firms, proven an elusive goal. Caution among investors has reigned as there have been lawsuits tied to the status of workers (whether part-time or independent contractors). The tough slog in an IPO market that is slowing to a standstill (not to mention busted IPOs) has also led to investor skittishness.

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