On-demand food delivery startup Postmates has been drumming up its newest funding round of at least $100 million, according to TechCrunch. The round is said to be led by Founders Fund, which also led Postmates’ $5 million Series A financing.
Postmates was founded in 2011 by Sean Plaice, Bastian Lehmann and Sam Street. Postmates users can order food from any participating restaurant and have it delivered anytime from anywhere. Delivery fees start at $2.99 and go up depending on the distance between the restaurants and users’ locations. Postmates has also recently launched a subscription-based free delivery feature that provides users with free delivery for orders of more than $25 if they pay a monthly fee of $9.99.
Like other on-demand delivery businesses, Postmates operates on a revenue-sharing model with its couriers. According to TechCrunch, Postmates takes 20 percent of the delivery fee for each order, while the other 80 percent, including any additional tips, goes to the courier. The past few years have seen exponential growth in food delivery apps as people look for more convenient meal solutions. Players like DoorDash, Caviar and Munchery have emerged to challenge Postmates’ market domination, as have several regionally-based delivery services. UberEATS, the meal delivery branch of on-demand ride-sharing giant Uber, also launched in 2014 to capitalize on the growing demand for food delivery. Not to mention Eat24 and Grubhub, both of which charge much less for delivery.
According to TechCrunch, Postmates has yet to show a profit, but CEO Bastian Lehmann has said that the company is on track to do so in 2017. The company currently operates in 40 major metropolitan cities in America. Prior to this financing round, Postmates had previously raised a total of $140 million.