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DoorDash Picks Up Another $100 Million at Nearly $13 Billion Valuation

Candy Cheng

(Bloomberg) -- DoorDash Inc.’s $2 billion war chest is getting even bigger. The food delivery startup, backed by the likes of SoftBank Group Corp. and Sequoia Capital, is receiving a new cash infusion of $100 million, according to a person familiar with the matter. 

The investment comes on top of a $600 million funding round the company announced in May led by Darsana Capital Partners. The additional $100 million comes from accounts advised by T. Rowe Price Group Inc., a first-time DoorDash investor, and is part of the same funding round, said the person, who asked not to be identified discussing private information. 

DoorDash, launched in 2013, has ramped up its fundraising recently, bringing in almost two-thirds of its roughly $2 billion in total money raised over the last 18 months. SoftBank first invested in DoorDash last year, and in May investors gave the unprofitable company a $12.6 billion valuation. 

DoorDash has benefited from SoftBank’s investing ethos of providing plenty of money that startups can use to subsidize prices and gain share at the expense of competitors—some of them publicly traded and more concerned about keeping costs in check. The company is currently the biggest food delivery player in the country, comprising 35% of consumer spending in the category, according to Edison Trends, a market research firm. But as some of SoftBank’s other big bets turn sour—including WeWork parent We Co. and Uber Technologies Inc.—DoorDash may run similar risks of prioritizing growth over profitability. 

In addition to the new funding, DoorDash this week discussed the results of its new pay model in a blog post. Earlier this year, the company had come under fire for its handling of customers’ tips, prompting Chief Executive Officer Tony Xu to promise to change its policy. Before the updates, the company paid workers a certain amount per job, inclusive of tips. That meant if a customer tipped generously, DoorDash might put in less of its own money to cover the base payout. That policy, which was also used by some other delivery companies, drew ire from those who felt that tips should amount to additional pay for a delivery worker, on top of their paychecks from the company. 

On Tuesday, DoorDash said consulting firm Beacon Economics had found that the company’s payments to its drivers, or “Dashers,” had increased by about 12.5% on average after the changes. Overall Dasher earnings, including tips, increased by $1.30 on average, to $18.54 per hour.

Other investors in DoorDash’s previously announced funding round in May included Coatue Management, Dragoneer Investment Group, DST Global, Sequoia Capital, SoftBank’s Vision Fund and Singaporean state investment company Temasek Holdings.

To contact the author of this story: Candy Cheng in San Francisco at ccheng86@bloomberg.net

To contact the editor responsible for this story: Anne VanderMey at avandermey@bloomberg.net, Mark Milian

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