Instant delivery platform Gopuff recently delayed its initial public offering (IPO) and is instead trying to raise $1 billion in debt that could be turned into stock while also lowering drivers’ minimum pay in California, according to a report Thursday (April 14) from The New York Times.
The company has done two rounds of job cuts this year, including last month when it laid off about 450 people, or 3% of its 15,000 workers, the report said, proving it’s not immune from the struggles of an industry that’s been rife for consolidation.
Last month, Instacart cut its valuation from $39 billion to $24 billion, and the report noted that DoorDash, Grubhub and other delivery services have struggled to gain any traction as public companies.
“These companies are fine during a very ebullient and frothy capital markets environment,” said Ken Smythe, chief executive of Next Round Capital Partners, which advises investors buying and selling stakes in startups. “The world has changed significantly in the past 60 days.”
Gopuff co-founder Yakir Gola told the NYT that delivery was “very logistically complex — it takes a lot of time and a lot of effort and capital,” but having warehouses and inventory is the only way to profit over time because it means the company can make money on the goods it sells, not just delivery fees.
“Once you can execute, and obviously that’s hard, it wins in the long term,” Gola said.
Gopuff is delaying its IPO because of stock market volatility and the fact it has enough cash on hand to avoid going public for now. Accoridng to the report, the company’s layoffs are part of a global restructuring plan.
Related: Gopuff Teams With UK Grocer Morrisons for Instant Delivery
In March, Gopuff partnered with U.K. supermarket giant Morrisons to quickly bring thousands of goods, including locally-made food products, to consumers across the country as part of a multi-year deal that adds fresh food, Morrisons-branded items and other brand name products to Gopuff’s platform.
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