Who Really Owns DoorDash?

“Fighting for the underdog is part of who I am and what we stand for as a company.” — Tony Xu, DoorDash CEO

Back in 2013, venture capitalist Saar Gur found himself burning with curiosity in the untapped food delivery space, specifically “Fluc”. Gur emailed a buddy working at this little voguish Mediterranean restaurant in Silicon Valley known as Oren’s Hummus. Amidst their dialogue, Gur was met with a response that could’ve netted his firm billions. However, that email only precipitated a position worth hundreds of millions of dollars today.

“Fluc is a company I have used at Oren’s,” the general manager wrote in her reply. Her callous tone was oozing through the screen as so matter of fact, that Gur felt pretty confident in what direction this was heading. Not so fast, instead she went on to pitch another food delivery company. “My team loves DoorDash as do many of our customers. Fluc definitely has better marketing material, but DoorDash builds a relationship rather than just another delivery company who picks up and delivers without much more than that.”

Spoiler alert: Fluc would ultimately join a chock-a-block morgue of go phut food delivery startups, but that’s where it gets interesting . . .

As luck would have it, Gur’s wife is a restaurateur with a finger on the pulse of food delivery and the potential growth surrounding the sector. He espied the four founding fathers of DoorDash, including now-CEO Tony Xu. DoorDash had just finished wrapping up Demo Day at Paul Graham’s Y Combinator when they first shook hands. Gur recalled, “Tony is just remarkable, we were finishing each other’s sentences.” From the jump, Gur proposed to fund their seed round. He said, “My only mistake was I think I could probably have led the entire round.” Gur’s venture capital firm, CRV, ended up sharing the round with Menlo Park angel investor conglomerate Khosla Ventures.

“Initially I want to say I owned about 10% of the company,” Gur recalls. I think they then added a few more people into the note, so I think the final ownership may have been just under 10%.”

Alfred Lin from Sequoia Capital, the former COO at Zappos, passed on the seed round after a shaky meeting with the team. Lin was openly skeptical that the DoorDash model seemed to be based on “college kids spending their parents’ money.” Then, after about a year of pondering, Lin came to his senses and led the $17.3 million Series A round, reserved a board seat, and claimed about one-fifth of DoorDash’s shares for his firm.

By and large, once Sequoia throws capital at a company, there’s always a slew of firms ready to add their name into the hat. In 2015, John Doerr and his firm, Kleiner Perkins, announced their supervision of DoorDash’s Series B round and donned the startup with a cool $595 million valuation. Later that year, DoorDash reached out to investors about a potential billion-dollar valuation.

As markets naturally ebbed and flowed, investors started getting hungry eyes for other newer, hip Silicon Valley companies. Thus, DoorDash lowered its expectations and Sequoia agreed to invest again at a similar price to Kleiner. They raised $127 million at a post-money valuation of roughly $700 million, giving DoorDash a lower share price and a higher post-money valuation. At the time, it looked like Sequoia was doubling down on a losing investment, but it ended up being a prophetic move. Clearly, it would have been better for Sequoia if DoorDash didn’t need the money, but by investing a slug of capital in DoorDash, Sequoia diluted its own early investment while buying that ownership percentage back with new money.

“DoorDash already operates in 600 cities, but will expand to 1,600 this year.” — Tony Xu

DoorDash did what seemingly every starved and disheveled startup does; crawls to SoftBank’s doorstep, the mammoth $100 million dollar Vision Fund. DoorDash started negotiations with SoftBank’s Jeffrey Housenbold only to learn that SoftBank was already going to sink a heavy investment into Uber for their food delivery service, Uber Eats. The Uber round closed, DoorDash didn’t have a deal, and they grew anxious about its dissipating bank account.

In due course, Housenbold would persuade Masa that food delivery wouldn’t be an isolated market, and in March 2018, SoftBank led a $535 million valuation round pinning DoorDash’s value at $1.4 billion. Jeremy Kranz at GIC investment group and Sequoia played an integral part in the round that would indelibly modify the company’s ownership hierarchy. The same deal that would make SoftBank the biggest shareholder in DoorDash, even though Sequoia had invested in the company years earlier and participated in every round thereafter. Mr. Kranz and his shop is now the third largest shareholder. Today, Gur owns far less of the company than he once did, an estimated 4% after CRV invested about $10 million in the company.

Make no mistake, Gur still runs a bigwig fund, so he could rinse and repeat his process by gobbling shares of propitious companies that catch his eye along the way. In fact, he’s said his firm is still the largest shareholder in cloud company Airtable, thanks to his aggressive principles. In total, Sequoia put up $217 million for DoorDash. Khosla Ventures, Kleiner Perkins and other early funds are now minuscule investors with less than 5% stakes in the company. Sequoia has a 15.3% stake in DoorDash, accounting for dilution. Even at a $16 billion valuation, that stake is worth $2.4 billion. Despite the Sequoia’s due diligence, SoftBank owns 18.6% of the company.

“DoorDash collects hundreds of millions of data points.” — Tony Xu

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