$225 million and $2.4 billion.

Those two numbers are dominating headlines ahead of the Postmates IPO. The private food delivery company just raised $225 million from the private equity firm GPI Capital. This recent round of funding came at the eleventh hour and pushed Postmates’ valuation to $2.4 billion.

After confidentially filing to go public in February, Postmates is being patient with its public offering. The feeling now, however, is that a Postmates IPO is just around the corner.

What is Postmates? 

For those unfamiliar, Postmates is a goods and food delivery service. All you have to do is open the app on your phone and you can have a hot meal delivered to your door. The app is a peer-to-peer service, so anyone can deliver for Postmates as an extra source of income. Postmates has couriers bringing customers what they want at a moment’s notice in nearly every city.

Postmates is most widely used for food delivery, but the company insists it can be used for almost anything. It just requests users are reasonable with their orders.

The best part about Postmates is the price. Typically, delivery costs can be substantial. But with Postmates, the delivery fee is usually only around $3.99.

Capital Raised Ahead of A Postmates IPO

Since 2011, Postmates has raised $906 million. Most of that has come from GPI Capital. Recently, Postmates gave the firm a controlling stake.

Postmates CEO Bastian Lehmann told Forbes, “We are excited to have GPI as a partner and the lead of this round during such a pivotal year for Postmates.”

Postmates is also backed by Uncork Capital, Founders Fund, Struck Capital, Spark Capital, Tiger Global Management and Slow Ventures, among others. 

Postmates IPO is around the corner.

Postmates Competition

The food delivery market is congested. Postmates gained the endorsements of certain influencers and musicians who boasted of outrageous takeout orders from the world’s finest restaurants.

“Our entire marketing strategy is around influencers who are real customers,” Lehmann said. “Chance the Rapper, Kylie Jenner — these are people who live in L.A. and use Postmates all the time.”

That certainly helps, but celebrity endorsements can only take you so far.

According to Second Measure, Postmates only controls 11% of meal delivery sales. That means Postmates is significantly trailing rivals DoorDash (36%), Grubhub (32%) and Uber Eats (15%). But the entire food delivery industry is growing quickly. As of August, industry sales had grown 33% year over year.

Hopefully a buzzy Postmates IPO and its innovative new features can help the company capture a larger part of this growing customer base.

Postmates’ Innovation

Controlling the food delivery market requires innovation, and Postmates has made strides to distinguish itself from the competition.

The company is testing automated bot delivery. Postmates received approval from San Francisco Public Works to operate a cooler-looking rover called “Serve.” The rover moves at walking speed and navigates pedestrians with ease. The idea is that the “Serve” can deliver products faster, even when there’s congested street traffic.

Also, Postmates rolled out a “Party” option which is similar to ride-sharing. It helps customers save on fees by allowing drivers to pick up multiple orders at once.

These features both add value to the customer and cut spending costs for Postmates.

Will the Postmates IPO Be a Good Investment?  

The Postmates IPO may not be the best investment. Much of the money is made pre-IPO. Institutional investors can buy up millions of dollars of shares at a reduced price. By the time the market opens for retail investors, the share price is often inflated.

Investing in tech startup unicorns is tricky business. Postmates may blossom into a delivery giant. But, controlling the food delivery market is difficult because of the stiff competition.

The Postmates IPO will almost certainly happen in 2019. When the opportunity to invest comes, make sure you understand the risk-to-reward potential.

Keep an eye out for more of these potential investment opportunities, like the Airbnb IPO.

Leave a Reply