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DoorDash Raises $40 Million for On-Demand Delivery

DoorDash says one in three households in the San Francisco Bay Area has ordered food delivery from its service.

Vjeran Pavic for Re/code

In what we’ve called the instant gratification economy, a mess of on-demand delivery companies are now sorting themselves out. And Palo Alto, Calif.-based takeout app DoorDash is getting a big vote of confidence with a $40 million Series B funding round led by Kleiner Perkins — that venture capital firm we keep writing about while it’s on trial — along with existing investors Sequoia Capital, Khosla Ventures and Charles River Ventures.

DoorDash, which is about a year and a half old and has 65 employees and many more contract workers, now operates in eight markets, a number CEO Tony Xu said he hoped to double before the end of the year. The company currently only delivers food from restaurants. Xu said he wants to deliver other things, too.

Xu wouldn’t give much in the way of details about how large DoorDash’s business is, but he claimed one in three households in the San Francisco Bay Area has ordered food from the service. He also said every market where the company has launched since the Bay Area has larger order volume.

DoorDash has many competitors, and some of the other startups have already been bought, including Caviar by Square and Eat24 by Yelp. Compared to others in the space, DoorDash has developed a reputation for smarts around how to manage the many factors that make a delivery reliable — how long it takes to prepare food, how many people to keep on call based on irregular demand, which “dasher” is best to pick up an order and deliver it, what mode of transportation the dasher should take, etc.

“The technology in this company was enormously appealing,” said Kleiner Perkins’ John Doerr in a phone interview about the deal. “Just the number of Stanford machine-learning experts they could hire — machine-learning people go crazy for this problem. It’s way more complicated than people realize.”

What’s the big deal here? Is there really a huge company to be built around a takeout service? Yes, Doerr said — the delivery market is already something like $70 billion in the U.S., according to the IPO filing of GrubHub, a 10-year-old competitor that recently went public. “I think the opportunity is to be the logistics platform for last-mile delivery.”

So if that’s the long-term goal, how will DoorDash match up against Uber and Amazon? “We shouldn’t confuse last-mile delivery with urban mobility,” Doerr said of Uber. He declined comment on Amazon, where he was a long-time member of the board of directors.

Word of the round was first reported by Fortune.

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