Delivering the Goods: the long road to the Deliveroo IPO

With Deliveroo’s IPO finally en route, we take a deep dive into the food service’s remarkable history and CEO.

Eight years after the company’s 2013 inception, Deliveroo’s IPO is finally being cooked up by founder William Shu. To strain the metaphor further, you could even say that the initial public offering has left the kitchen and is on its way to your door, having been pencilled in for a delivery in Q1 2021. 

As of this week, £50 million worth of shares are now available to retail investors and customers, provided they have registered their interest via the company’s app. (If you want to order a pizza to celebrate your investment while you’re at it, that’s up to you).

“Far too often normal people are locked out of initial public offerings,” founder Will Shu said as he announced the IPO. It’s Shu’s mission, he claims to give “as many customers as possible the chance to become shareholders.”

Each customer will be able to get their hands on a not insignificant £1000-worth of shares.

This despite the fact that Deliveroo remains a loss-making company, having posted losses of some £222 million in 2020 as the Covid pandemic forced us all to grasp our pennies tighter and focus on perfecting our banana bread recipes instead of ordering in. 

However, this is an improvement on the £317 million loss the company suffered in 2019. Despite this, as CNBC reports, the company’s revenues did climb to £4.1 billion in 2020, a significant increase from £2.5 billion in 2019.

But, with Goldman Sachs and JP Morgan Cazenove appointed as joint coordinators of the IPO (which has not yet had a date confirmed), the company could be valued at up to $10 billion (£7.2 billion) following a $180 million (£130 million) round of funding taking its initial valuation to a confirmed $7 billion (£5 billion).

“I’m not one of those Silicon Valley types with a million ideas,” said Shu in a letter included in the company’s ‘expected intention to float’ letter, filed on Monday 8th March 2021. “I had one idea,” he said. “One idea born out of personal frustration. An idea that I was fanatically obsessed with: I wanted to get great food delivered from amazing London restaurants.”

Shu is well on the way to achieving his dream: Deliveroo currently boasts a client base of 115,000 cafes, restaurants and takeaway vendors across 200 cities in a dozen countries with monthly takings comfortably in the six figures. 

But not everyone is convinced. “This valuation of Deliveroo seems excessive for a business which is still many years from profit, especially given that some hold significant doubt whether the home takeaway delivery model can become profitable outside of London,” John Colley, associate dean of Warwick Business School, told CNN.

However, with rivals like Uber Eats and JustEat taking a slice of the market (worth £8.5 billion in the UK, as of 2019), Shu is surely confident the IPO will allow Deliveroo’s piece of the pie to grow ever larger. 

“Our ambitions have increased as we start to truly understand and execute on the opportunity in front of us in online food,” he said, adding that the company is “just getting started”.

Shu got his own start in Connecticut in 1979. Born to Taiwanese parents, Shu studied at Northwestern University before going to work with Morgan Stanley as an investment banking analyst in 2001. In 2012, he earned an MBA from Wharton Business School. 

It was while working in Morgan Stanley’s London office that the idea for Deliveroo came about. Like the best ideas, it was driven by hunger. Burning the midnight oil and finding himself peckish, Shu became frustrated at the lack of after-hours delivery options in the City.

He recruited Greg Orlowski, childhood friend and software engineer to help him bring the idea to fruition, with Shu reportedly working as the company’s very first delivery person for every night for eight months straight in order to better understand the customer experience. (Other accounts have it that he once worked for JustEat as a delivery driver to size up the competition). 

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