UPDATED 16:44 EST / AUGUST 30 2022

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Instant delivery startup Gopuff reportedly raising up to $300M in debt financing

Gopuff, an instant delivery startup that received a $15 billion valuation last year, is reportedly seeking to raise as much as $300 million in new debt financing.

The Wall Street Journal reported the news today, citing sources familiar with the startup’s plans.

Gopuff, incorporated as GoBrands Inc., operates a so-called instant delivery platform through which consumers can purchase groceries and other items such as home appliances. Gopuff delivers items to consumers in less than 30 minutes after a purchase is made.

The startup provides rapid delivery times with the help of logistics hubs it refers to as micro-fulfillment centers. Gopuff’s logistics hubs are located in close proximity to consumers, which enables the startup to provide faster shipping times than traditional food delivery apps. Additionally, Gopuff reportedly procures merchandise from suppliers in a way that allows it to quickly adjust its product catalog when customers’ buying preferences change.

Gopuff operates hundreds of micro-fulfillment centers and offers its platform in more than 1,000 cities. The startup rapidly expanded its logistics network over the past few years using the approximately $3.4 billion in venture funding that it has raised from investors. Along the way, Gopuff’s valuation reached $8.9 billion last March and reportedly jumped to $15 billion three months later. 

Gopuff is reportedly close to securing the up to $300 million in debt financing that it’s seeking to raise. According to today’s report, the startup intends to raise the financing in the form of a revolver loan. A revolver loan is a credit line that enables companies to borrow funds at any time up to a certain predetermined limit. 

Gopuff is reportedly raising the financing after delaying a planned stock market listing that would have taken place this year. One Gopuff investor, Fidelity Investments Inc., is said to have marked down the value of its stake in the startup by nearly 50%.

Today’s report cited sources as saying that the startup generated a loss of $400 million during the first three months of 2022. Daniel Folkman, Gopuff’s senior vice president of business, told the Journal that the increased spending was the result of investments in growth initiatives. 

The startup has since reduced spending by implementing cost-cutting initiatives, the executive added. Gopuff laid off 10% of its workforce, or about 1,500 employees, in June. The startup at the time also announced plans to close 76 of its logistics hubs.

Following the cost-cutting initiatives, Gopuff’s margins are now reportedly improving. The startup estimates that the capital on its balance sheet, which stood at about $1.5 billion in April, is sufficient for four years. 

The up to $300 million in debt financing that Gopuff is seeking to raise would further extend its runway, as well as potentially give the startup more flexibility to invest in new growth initiatives. Earlier this year, Gopuff expanded its market reach by making its platform available in France. More recently, the startup added a set of new marketing features to its Gopuff Ads service, which enables companies to place ads in its delivery platform’s interface. 

Image: Gopuff

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