When on-demand delivery company goPuff dropped the news of its $1.15 billion investment this week, it seemed at the same time astounding and yet not: It’s sort of what we’ve come to expect, as the billion-dollar investment is the third massive raise for the company in less than a year and a half.
It comes only months after the company raised $380 million to expand its product offering and about 14 months after we learned of its $750 million investment from SoftBank’s $100 billion Vision Fund.
But a billion-dollar investment — boosting its valuation to $8.9 billion — is still a shock to a system, especially far outside traditional tech hubs. For some context about just how often this happens, we turned to this list of minotaurs (yep, Axios named startups that raised more than $1 billion after a Greek monster that has the body of a man and the head of a bull).
Though goPuff is an ecommerce business, it has much more infrastructure than a pure software company. Food delivery and logistics put it in a category with everyone ranging from Amazon and Uber to DoorDash.
And now goPuff joins some of them in the ranks of American companies that have raised more than $1 billion. It’s a small list — only 25 in the U.S. as of 2019. The Philly company can now rub elbows with Uber, DoorDash, Juul, WeWork, Lyft and Airbnb.
For many, including investor Brett Topche, cofounder of Red and Blue Ventures, it’s the biggest raise they’ve heard in a while, in Philly and beyond. It’s specifically the biggest non-pharma round he can remember “by a pretty comfortable margin,” he told Technical.ly in an email.
So what does this mean for investors and the founders here trying to grab their attention? Does a billion dollars help put Philly on the map? In a year of remote work, does location matter as much anymore?
To Topche, the Philly raise sure doesn’t hurt, but he’s interested to see if it helps as much as it used to.
“In the past, when meetings were mostly in person, new investors backing companies in Philly meant they were coming here for board meetings, etc.,” he said. “Often, they would meet with additional companies in town when they were here anyway. Suspect it’s not nearly as helpful in a world where people are primarily dialing in via videoconference, but as more people get vaccinated and maybe meetings are in person again, maybe that effect gets going again.”
Philly Startup Leaders’ new director, Isabelle Kent, shared enthusiasm for the raise in the org’s public Slack group Tuesday. She called it a “testament to the strategic and economic potential in Philly.”
“The move to acquire BevMo was brilliant, putting them well ahead of the competition with Drizly and other consumer delivery services,” Kent said in a DM. “An $8.9 billion valuation is incredible for any company, especially one that started out as a college project right here at Drexel only eight years ago. They’ve been playing chess since day one.”
Adit Gupta, cofounder of Lula, an eco-conscious delivery service for convenience stores, said he feels the raise should be an inspiration to all local entrepreneurs. He commended goPuff cofounders Rafael Ilishayev and Yakir Gola for persisting on their idea and growing quickly.
“I think that other founders should not get intimidated by these numbers, but rather think about the industry that goPuff is in,” he told Technical.ly.
Food delivery companies historically have to raise a lot to accommodate for their multi-sided marketplaces, and founders should think about the benchmarks for raising in their industry, Gupta said. They should also keep an eye on the customer lifetime value to customer acquisition cost that’s optimized for their industry.
“Nonetheless, exciting times for Philly from these awesome wins,” Gupta said.
“It’s validation that it doesn’t matter where you are,” he said. “Great companies can be built.”