Last fall, delivery startup goPuff made a big splash by raising $380 million in funding and acquiring West Coast beverage retailer BevMo shortly afterwards. Just a few months later, the Philadelphia-based company is announcing that it has raised another $1.15 billion in funding at an $8.9 billion valuation (compared to $3.9 billion in October).
Available in more than 650 U.S. cities, goPuff delivers a wide variety of products in under 30 minutes while charging a flat $1.95 delivery fee. Rafael Ilishayev and Yakir Gola, who serve as co-CEOs, founded the company in 2013 while they were students at Drexel University. When I first spoke to Gola last fall, he told me that the pair thought, "There has to be a better way to get convenience products delivered.”
The company now says its vertically integrated approach is a key advantage. GoPuff buys products directly from manufacturers, then distributes those products through its 250-plus "micro-fulfillment centers" and a network of independent drivers. Ilishayev said this results in rapid deliveries, strong unit economics, and a model that passes delivery fees directly to drivers.
"It's important that we're making our margin on product, not people," he said.
The company continues to expand its product lineup with new Better For You (healthy snacks), Beauty and Baby categories, as well as Curated Mystery Boxes. When I asked how new products fit into the larger goPuff brand and strategy, Ilishayev replied, "People, throughout our whole existence, have tried to put us into an industry: 'Are you convenience? Are you pharmacy?' The reality is that we're neither. We're in this category of instant needs, and our production innovation solely stems from consumer demand ... There's no category we offer on goPuff that consumers weren't crying out for."
GoPuff says that the new funding will allow it to continue expanding throughout the United States, as well as internationally, and to introduce new products. The round comes from D1 Capital Partners, Fidelity Management and Research Company, Baillie Gifford, Eldridge, Reinvent Capital, Luxor Capital and SoftBank Vision Fund 1.
In a statement, D1 founder and Chief Investment Officer Daniel Sundheim said:
goPuff is truly in a league of its own. We believe that the company's vision and differentiated model drive industry-leading economics and sustainable growth. Since we initially invested in goPuff last fall, we have been consistently impressed by the team’s ability to successfully execute against its growth plans. The company's potential is tremendous, and we look forward to the unique opportunities that lie ahead.