UPDATE: Feb. 22, 2019: DoorDash said Thursday that it has raised $400 million in its recent funding round, bringing its valuation to $7.1 billion.

Dive Brief:

• DoorDash is reportedly in the process of raising $500 million, which would bring its valuation close to $7 billion,  according to the Wall Street Journal. ​Temasek Holdings, Singapore’s state investment firm, is expected to head up this latest funding round.
• The new valuation brings the third-party delivery provider up four to five times as high as its valuation in March of last year, when it was worth $1.4 billion. Its valuation climbed to $4 billion in August.
• DoorDash amassed a market share of 18% last year and its growth outpaced all other U.S. delivery rivals, per research from Edison Trends Report. But Grubhub is still top dog in the segment, boasting 34% of total revenue in the online American food delivery space. 

Dive Insight:

Despite disappointing earnings from top third-party provider Grubhub, investors are still very keen on the food delivery segment, which could reach $3 billion in revenue by 2023 and make up 30% to 40% of restaurant sales in the coming years. Grubhub still garners over a third of restaurant delivery market share, but competition from the likes of Uber Eats, DoorDash and Postmates — as well as increased costs and expenses — helped stifle growth of its bottom line, according to The Motley Fool.

In this competitive space, a huge valuation would better position DoorDash ahead of a potential IPO, especially with top competitors also looking to go public. Uber, which owns Uber Eats, is reportedly worth $120 billion (a large chunk of which is its ride-sharing business) ahead of its IPO, despite its inability to generate a profit. Postmates, which filed for an IPO confidentially last week, is worth $1.85 billion after raising $100 million earlier this year. Grubhub is worth about $11 billion, according to Bloomberg.

DoorDash has been making big moves to garner more market share, expanding to all 50 states in January, starting a nationwide ad campaign and growing from 600 markets to 3,000 in 2018 — which was driven by over $700 million in investments raised last year. It now partners with 90% of the top 100 restaurant brands.

The next few years could be interesting for the top five delivery providers. Analysts previously told Restaurant Dive consolidation is expected to occur, especially as large providers eye small players struggling to increase revenue in an overcrowded segment.

Grubhub has already been an aggressive acquirer, buying Yelp’s Eat24, Foodler and OrderUp in 2017. It also acquired Tapingo, a delivery service for college campuses, last year and acquired Seamless several years ago. Waitr, which is also on the NYSE, completed its acquisition of Bite Squad in January.

With DoorDash turning its focus to the national stage, it could very well gobble up a smaller company. This would be even more likely if it becomes a public entity  as there would be additional pressure from investors to continuously grow. It was previously rumored to be in initial talks to merge with Postmates, allowing for the companies to become more competitive. But with Postmates pushing for IPO, that deal appears to be off the table, at least for now.