DoorDash Buys Deliveroo: What It Alerts for UK Startups 

It’s been a decade since Deliveroo earned a coveted spot on our 2015 Startups 100 record as one of many UK’s most promising disruptors.

Now, the progressive meals supply app is about to be acquired by US rival DoorDash in a deal value £2.9bn, in response to the BBC.

Usually described because the American equal of Deliveroo, DoorDash is already a large within the world meals supply house. With this acquisition, the mixed enterprise will function in over 40 nations, securing a dominant place out there.

Deliveroo co-founder Will Shu has described the deal as “transformative”. However some analysts are saying it bodes in poor health for the way forward for UK startup funding. So how did considered one of our most high-profile tech successes find yourself on the menu for a US competitor?

DoorDash snaps up Deliveroo

Earlier at this time, BBC Information confirmed that Deliveroo has agreed to be taken over by its US rival, DoorDash.

The deal values the enterprise at £2.9bn, with an agreed worth of 180p per share. This marks a 44% enhance on Deliveroo’s share worth from earlier takeover talks in April.

That mentioned, it’s a steep drop from Deliveroo’s authentic 390p share worth when it launched on the London Inventory Trade in April 2021.

“The mixture with Deliveroo will strengthen DoorDash’s place as a number one world platform in native commerce,” the 2 firms mentioned.

Concerning the acquisition, Will Shu, chief government and co-founder of Deliveroo, instructed the BBC that he was “very happy with every thing we have now achieved as a standalone enterprise”, including “the enlarged group could have the size to put money into product, expertise and the general client worth proposition.”

Whereas it appears the takeover is inside attain of closure, it nonetheless requires shareholder approval to be a executed deal.

Why is Deliveroo promoting up store?

Deliveroo started as a humble storage startup known as ‘Roo Meals’ in 2013. Co-founded by Will Shu and Greg Orlowski, its mission was easy: “meals you like delivered to your door” in underneath half-hour.

The London-based startup rapidly expanded to cities throughout Europe and the Center East, ultimately establishing Deliveroo as one of many UK’s most celebrated tech unicorns. It featured on the Startups 100 Index in 2015.

However regardless of its early success, it hasn’t all been straightforward. Following the pandemic, the corporate confronted stagnating development amid mounting competitors from world gamers like Simply Eat and Uber Eats. Deliveroo’s 2021 IPO, as soon as seen as a serious milestone, was thought of a flop, with some even calling it the “worst IPO in London’s historical past.”

Within the years following, Deliveroo has been underneath growing strain from traders. Whereas Deliveroo nonetheless pulled in round £2bn in income in 2024, it lags far behind its US rival DoorDash, which took in roughly £8bn over the identical interval.

For DoorDash, although, this can be a strategic acquisition. The US-based supply big is eager to increase within the UK and Europe, and Deliveroo gives ready-made infrastructure, a trusted model, and a loyal buyer base in 9 nations. Regardless of its challenges, Deliveroo is clearly a beneficial asset, and the £2.9bn provide is proof of that.

Nonetheless, all of this raises questions concerning the competitiveness of UK tech. As the newest in a collection of high-profile acquisitions this yr, is it a sign that UK startups are struggling to match the tempo of their world rivals?

What the Deliveroo sale means for UK startups

Deliveroo’s acquisition is likely one of the greatest UK tech exits in recent times. On the one hand, it’s a severe win: homegrown startup scores multibillion-pound valuation. Nevertheless it additionally reveals doubtlessly worrying truths concerning the UK startup ecosystem.

The deal could possibly be seen by some as validation for the UK’s capacity to provide word-class startups, however others will see it as a cautionary story.

Deliveroo was as soon as tipped to develop into the UK’s reply to Uber or Amazon. Nevertheless it struggled to scale and keep worthwhile post-IPO. The choice to promote, particularly to a US competitor, could counsel that UK startups are going through limitations in relation to scale-up. Particularly, struggles with enterprise capital (VC) confidence within the UK.

A number of British startups have not too long ago been snapped up by US companies. Runna, the favored operating app, was acquired by Strava final month.

These acquisitions are a “dream come true” for his or her founders. However they could even be a mirrored image of UK startups struggling to entry the late-stage funding, innovation incentives, or market confidence they should succeed independently.