US delivery app goPuff has announced it has raised $1.15bn in new funding, more than doubling its valuation to $8.9bn, as investors continue to pile into the booming last-mile delivery sector.
The deal brings 2021 investment in US grocery and convenience goods start-ups so far to more than $1.7bn, according to PitchBook data, eclipsing the $1.3bn poured into the sector last year as demand soared during coronavirus lockdowns.
GoPuff, which was valued at $3.9bn as recently as October, said it would use the funds to expand its presence in the US as well as internationally, and would build on efforts to diversify its product lines in what it termed the “instant needs” category. It includes products in areas such as beauty, baby products and a “Better For You” range of healthier foods.
The round attracted new and existing backers, including D1 Capital Partners, Fidelity and SoftBank’s Vision Fund.
“This milestone further validates the success of goPuff’s vertically integrated model as well as the massive global opportunity for the category,” said Yakir Gola, goPuff’s co-founder and co-chief executive, in a statement on Tuesday.
The Philadelphia-based start-up, founded in 2013 catering to university students, relies exclusively on its own inventory stored and distributed from its small warehouses, rather than sending couriers to existing local stores, as is the case with the likes of Instacart and Uber Eats.
GoPuff said it had a network of more than 250 facilities across the US, not including the roughly 150 locations belonging to BevMo!, the alcohol retailer it acquired in November for $350m. GoPuff charges a flat fee of $1.95 on every order, aiming to deliver within an average of 30 minutes.
Another competitor, DoorDash, uses a hybrid model of local stores and its own facilities, DashMarts, of which it says it has opened more than 25 nationwide.
Data from Edison Trends suggested DoorDash was able to come from behind goPuff to capture 58 per cent of the emerging convenience store market — which does not include larger grocery store sales.
GoPuff’s round follows fresh funding for Instacart, which earlier this month confirmed a $265m round from existing investors, valuing the company — which is expected to file for IPO this year — at $39bn.
Investors are banking on consumers having formed new habits during the pandemic, and would continue to buy food online once stores fully open.
Data from Adobe Analytics suggested online grocery sales in January were up more than 230 per cent on pre-pandemic levels, though some of it was fuelled by the click-and-collect capabilities added by stores such as Walmart and Amazon-owned Whole Foods.
