Food delivery app DoorDash is going public, and if all goes according to plan, its CEO Tony Xu and two other cofounders will all become billionaires.
The 36-year-old Tony Xu is leading the delivery app’s push for an initial public offering likely before year-end that would boost his net worth to just over $1 billion with shares at the low end of its targeted IPO price range.
DoorDash cofounder and CEO Tony Xu is the son of Chinese immigrants who supported their family by working in restaurants. (Photo by Noam Galai/Getty Images for TechCrunch)
gettyAccording to a filing made public Monday, DoorDash plans to list 33 million shares, at a price range between $75 to $85 per share. Xu owns 4.6% of the delivery giant while cofounders Andy Fang, 28, and Stanley Tang, 27, each own 4.2%. A fourth cofounder, Evan Moore, now a partner at Khosla Ventures, is not listed on the filing.
After a June funding round saw investors pour another $400 million into the business, DoorDash was valued at $16 billion. The proposed IPO pricing values the business at between $23 billion and $32 billion.
“As an entrepreneur,” Xu told the LA Times in 2018, “every day, every year, there are things that will make you increasingly uncomfortable. If you're willing to bear that uncertainty, I think you'll find a lot of rewards and satisfaction from it. Typically, it's when you experience discomfort that you grow.”
DoorDash is backed by SoftBank Vision Fund, venture capital firm Sequoia and the private equity arm of the Singapore government and has been pushing for an IPO for years. It has flourished this year because of the pandemic. DoorDash reported revenue of $1.9 billion in the nine months ended Sept. 30, more than double compared to the previous year.
Xu was born in China to a professor and a doctor who moved the family to the U.S.in 1989 when he was 5. His father attended the University of Illinois at Urbana-Champaign which awarded him a Ph.D. in aeronautical engineering. His mother, a doctor in China, was unable to practice in the U.S., instead she worked three jobs, including as a server at a local Chinese restaurant. She eventually opened an acupuncture and medical clinic in Champagne, Illinois, and later in the San Francisco Bay Area, where she continues to operate. Xu attended the University of California, Berkeley and graduated with a degree in Industrial Engineering and Operations Research before enrolling in Stanford’s Graduate School of Business, where he met Moore.
After graduating in 2013, the pair joined with Tang and Fang — two computer science students still in their junior year — and started an app designed to help restaurant workers. Tang currently heads up consumer engineering while Fang leads DoorDash Labs. Both sit on the board and were named to the Forbes 30 Under 30 list in 2015.
DoorDash now delivers meals to 18 million customers a month from 390,000 restaurants and merchants. Like many in the competitive delivery market, DoorDash is still losing money, reporting a net loss of $149 million for the first nine months of 2020, down from $667 million in 2019.
The app has survived a flurry of consolidation and deal making to become the biggest food delivery app in May with more than 45% market share. The dominance came as GrubHub, which was originally chased by Uber, was acquired by Just Eat Takeaway.com for $7.3 billion.
Postmates had actually filed an S-1 to go public earlier this year in February, around the same time as DoorDash did but was acquired by Uber for $2.65 billion in June.
DoorDash had 49% of all meal delivery sales in September, according to analytics firm Second Measure, compared to 22% for Uber and 20% for GrubHub, while it is poised to benefit from the timing of the IPO.
“In this COVID backdrop food delivery is a main artery to get meals for many consumers and that trend looks to accelerate with a second wave,” says Wedbush managing director Dan Ives. “It’s a golden age for food delivery. The Street will be laser focused on this deal.”
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