Food delivery startup Deliveroo announced on Friday that it has raised a giant $275 million (£210 million) Series E funding round — a very substantial amount for a London startup.
Index Ventures partner Martin Mignot led Deliveroo’s comparatively tiny £2.75 million Series A round in 2014 and sits on the board of the company. He says Deliveroo is trying to use its network of riders more efficiently, and then pass that saving onto customers.
“The more data you get, the better you get at utilising [riders],” he says. “We’ve seen riders doing six to eight orders per hour. That’s on the super high-end of the range. There’s quite a fair bit of improvement that can happen. If we get even halfway there it changes the dynamic a lot.”
He continued: “You can either choose to increase the proximity or most likely we want to pass that extra efficiency onto the consumer and just increase the market size. The end goal is to make it as cheap as possible. It’s not to do a small-volume, high profit type of business. It’s to do a high-volume, low profit type of business.”
Deliveroo is operating in a crowded space. Competitors like Just Eat, Jinn, and UberEATS are all trying to be the platform that people use to order their meals online and get it delivered to them. And just last week, Take Eat Easy shut down after running out of money.
Mignot praises Just Eat, saying “they proved that there is a lot of margin to be made in that sector.” He says Deliveroo could see similar margins to Just Eat, “or potentially even higher.” And as for UberEATS, well, he refers to them simply as a “copycat.”
TechCrunch has reported that Deliveroo may be looking to sell or partner with one of those competitors, naming “Uber, Delivery Hero, Amazon, Just Eat and Takeaway.com” as possible buyers. But Mignot says that’s “not accurate at all,” and also denied that Deliveroo hired Morgan Stanley to help it raise money or sell itself.
As Deliveroo is launched around the world, what differences is it finding in overseas markets? Mignot mentions Dubai as one interesting example. “In Dubai a lot of the restaurants are in malls,” he says. “You need to have a runner sometimes who goes and picks up the order from the mall and brings it to the actual riders.”
Mignot published a TechCrunch post in July that specifically mentions drones as the future of the meal delivery. But Deliveroo isn’t using drones yet. When are meals going to arrive via quadcopter?
Sadly, Mignot says drone deliveries are “not there yet.” But he does point to the wheeled robots created by Starship Technologies that are set to be tested out in London over the next few months. “It’s more of a PR stunt really at this stage,” though. “That’s why we haven’t pushed hard on it.”
“There’s just so much to do with enhancing humans by using data and technology,” Mignot explains. “There’s a long way to go there before trying to replace humans. I don’t think that’s a focus. Our drivers will be on the streets for a long time to go.”