Internet retail giant Amazon is to invest hundreds of millions of pounds in the British food delivery app Deliveroo.
As exclusively revealed by Sky News, Amazon has confirmed it is to back the UK-based group as part of a $575m (£450m) funding round, alongside existing investors T Rowe Price, Fidelity Management and Research Company, and Greenoaks.
It takes the total amount of capital invested in Deliveroo to more than $1.5bn in the six years since it was launched.
The cash injection also gives the firm, which has become one of the biggest players in the so-called ‘gig economy’, a major boost in its international battle with Uber Eats.
The arrival of Amazon also alarmed smaller rivals such as Just Eat, which saw its shares fall 10% in early
trading over fears it would be squeezed in the market.
The company says the latest funding will enable investment in its tech team at its London headquarters, expand further to reach new customers and develop its delivery-only super kitchens, ‘Editions’.
Will Shu, founder and CEO of Deliveroo, said: This new investment will help Deliveroo to grow and to offer customers even more choice, tailored to their personal tastes, offer restaurants greater opportunities to grow and expand their businesses, and to create more flexible, well-paid work for riders.
This is great news for the tech and restaurant sectors, and it will help to create jobs in all of the countries in which we operate.
Amazon’s UK manager Doug Gurr said: We’re impressed with Deliveroo’s approach, and their dedication to providing customers with an ever increasing selection of great restaurants along with convenient delivery options.
Will and his team have built an innovative technology and service, and we’re excited to see what they do next.
Although Amazon will be the largest investor it has not been revealed how much of the £450m it is contributing.
The valuation attributed to Deliveroo through the funding round was also unclear, although sources said last November that it was being pitched at a valuation of between $3bn and $4bn.
Amazon is the world’s largest internet business, with a market value of roughly $920bn.
However, its previous move to break into the UK food delivery market was not a success.
Last December, it closed Amazon Restaurants UK, its London-based takeaway delivery service, amid fierce competition from Deliveroo, Uber Eats and Just Eat, among other rivals.
It had previously been reported to have made two approaches to buy Deliveroo outright, while rival Uber was said to have held preliminary talks with the British firm about a takeover.
Deliveroo, which handles takeaway orders for restaurant chains such as Byron, Pizza Express, Rossopomodoro and Wagamama, uses about 15,000 delivery riders in the UK.
The firm operates in more than 500 towns and cities in countries around the world, including Australia, France, Hong Kong, Taiwan and the United Arab Emirates.
Deliveroo has continued to faced controversy over its treatment of the riders who work for it.
Like companies such as Uber and Hermes, the parcel delivery firm, Deliveroo has faced accusations of riding roughshod over their workforces by refusing to treat them as employees.
It further fuelled criticism a year ago when it excluded its contractors from a £10m award of stock options to permanent employees.
In 2017, it bowed to pressure by overhauling the supplier agreement it uses to set out the terms on which thousands of couriers are employed.
Its revised employment document included the explicit clarification that couriers can work for other companies at the same time as they undertake work for Deliveroo – a key change that MPs had urged in a critical report on the so-called gig economy.
(c) Sky News 2019: Amazon to take slice of Deliveroo in £450m funding move