Early DoorDash backers saw big things ahead for the food-delivery firm - Business Insider

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DoorDash, the $12.7 billion food delivery startup, could make or break tech IPOs in 2020. Early investors explain why they backed the company and its founder.

Only a tiny fraction of startups achieve the kind of success DoorDash has seen. But early investors in the company say they aren't surprised at how the food delivery startup has turned out. To them, the company just made sense, and its founding team, particularly Xu, stood out even among all the high-achieving Silicon Valley entrepreneurs.

Several of DoorDash's early investors lived in or near Palo Alto at the time and were well aware of the paucity of food delivery options there and in other suburban areas. With Grubhub and similar companies primarily focused on big cities at the time, the only food consumers in less dense areas could get delivered was pizza and sometimes Chinese or other Asian food.

Including DoorDash in the Y Combinator and investing in the company was "not too hard of a decision, because it was literally a thing I had been wanting," Buchheit said. Before DoorDash came along, he continued: "It seemed a little bit mysterious that the only food that could be delivered to my house was pizza."

And some investors saw even bigger possibilities. Other companies in the food delivery market at the time, such as Blue Apron, were intensely focused on the food itself, said James Currier, now a managing partner at NFX. In pitching investors, they would talk about the quality of the food they would be delivering and how it would differ from that of other services in terms of the amount of salt or fat or who their target customers were, he said.

Some of DoorDash's early investors, including David Lee, then of SV Angel, were disappointed in the delivery options in Silicon Valley and were looking for a service like DoorDash.Part of what stood out for investors was Xu organization and his grasp of even the smallest details about his business. He could succinctly make his pitch, articulating what the business was all about, the early backers said. But he also had a command of the facts.

Early backers were also impressed with how quickly Xu and his team were moving. By the time they entered Y Combinator, they'd already started their service in Palo Alto and had paying customers, mere months after coming up with the idea for the company. They then quickly sorted through their struggles in Y Combinator and pressed forward.

 

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