Delivery startup DoorDash is hoping to secure a $400 million credit line ahead of its upcoming IPO, sources told Bloomberg on Thursday (Aug. 8).
JPMorgan Chase reportedly will lead the financing, and shares could be offered as early as next year, the sources told Bloomberg.
Obtaining credit before going public is a common negotiating tactic, with banks sometimes offering better terms in exchange for a role in the IPO.
DoorDash, which has a $12.6 billion valuation after raising $600 million in May, has been raising money at an impressive rate since its 2013 founding by Stanford University students Andy Fang, Evan Moore, Stanley Tang and Tony Xu. The San Francisco startup raised $535 million last year in March followed by a $250 million round in August 2018 and a $600 million Series G in May.
The food delivery market is a crowded space with competition from players like GrubHub and UberEats, as well as the general delivery movers and shakers like Postmates and Instacart.
The company also closed a deal earlier this month to buy Caviar, Square Inc.’s food-delivery service. The deal is meant to bolster both companies’ commitment to specialized merchant selection and will add Caviar’s premium restaurants to the DoorDash platform. DoorDash said it will help drive growth for these restaurants and cater to all food preferences and occasions.
To stay ahead of the competition, DoorDash also launched DashPass, a subscription model with zero-dollar delivery options. The service, which is available via its mobile app for $9.99 per month, offers zero-dollar delivery from a broad selection of restaurants, and also comes with other perks.
DoorDash recently faced criticism about its tipping policy, which the company used to subsidize what it paid workers. The company quickly vowed to change the policy.