Google takes on Uber (again) through Deliveroo Investment

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Deliveroo and UberEats riders (image source: marketingdirecto.com)

Amazon.com is leading a $575 million investment in the UK Startup Deliveroo.

Amazon Explores Autonomous Delivery Vehicles (source: thedrive.com)

This moves means buying a slice of the food delivery company, which is growing rapidly across Europe, and taking on Uber Technologies. This signals not only the beginning of direct competition for the European food delivery industry, but also the opening of another front between the two companies. The other being on autonomous vehicles.

Uber Self-driving Test Car

The London-based Deliveroo, which has raised $1.53 billion to date, will use the money from the round to expand its technology team and network and compete against the likes of Just Eat and Uber Eats.

The round is taking place in the context of consolidation in the food delivery sector. Deliveroo rival Takeaway.com agreed to acquire the German businesses of Delivery Hero SE for approximately 930 million euros ($1 billion) in December, while Uber was in early talks to buy Deliveroo, Bloomberg reported in September.

Deliveroo declared the new funding will partly go towards new innovations in the food sector, for example through delivery-only kitchens, as well as new formats.

Uber Eats and Deliveroo are also fighting for so-called virtual restaurants, where eateries lease kitchen space to prepare food for couriers. With no dining rooms or wait staff, these outfits pop up will sell their meals through the Uber Eats or Deliveroo’s app.

Amazon will be joined in the Series G funding round by existing backers T Rowe Price, Fidelity Management and Research Co. and Greenoaks. The round comes less than a year after Amazon closed down its London-focused food delivery business and show a strong level of confidence from both existing and new investors into the UK tech market.

Amazon has signaled its growing ambitions in food with Prime Now, which offers deliveries to major British cities within two hours. But it faces stiff domestic competition from the likes of Ocado Group, an online grocery pioneer that licenses its technology to the likes of Kroger Co. and aims to halve that time with a service called Zoom.

If this move is really the sign of a widening “tech war” between Uber and Amazon, it is bad news for the tech taxi company. Uber is already facing pressure from the likes of Google in the fight for driver-less vehicles, which many believe to be the only true path to profitability for the tech company. Both Amazon and Google have a great advantage over Uber: they do not rely on investors to fund their war chest.

Amazon’s investment is also one of its rare forays into the region. The last being the 2010 acquisition of BuyVIP.com, a private online shopping club, for $96.50 million.

The move therefore shifts more of the spotlight to the UK and European startup world as a confirmation of its growth and maturity. In recent years, in fact, the UK startup community in particular has been producing an ever increasing number of tech unicorns such as Monzo, Revolut and the very Deliveroo, which Amazon is investing into.

We will see what this particular investment move means for the tech market both worldwide and in Europe — for the moment what we can tell is that the UK startup investment world appears more active than ever!

Francesco

Director of Silicon Roundabout — The biggest Startup Hub and Tech Community in the UK

CEO of AGÀPE Properties — The first UK Property Investment and Multi-Let Management Company accepting cryptocurrencies