Deliveroo is having a rough start to its IPO. Here's how the food-delivery firm grew from being a hungry banker's idea to a publicly listed company.

Will Shu, Deliveroo's CEO and founder, inaugurating its first Deliveroo kitchen site in France, called Deliveroo Editions, on July 3, 2018, in Saint-Ouen, France.
Will Shu, Deliveroo's CEO and founder, inaugurating its first Deliveroo kitchen site in France, called Deliveroo Editions, on July 3, 2018, in Saint-Ouen, France.
Aurelien Morissard/IP3/Getty Images
  • The food-delivery company Deliveroo just went public on the London Stock Exchange.
  • Shares in the firm tumbled 30%, marking a tough start for the long-hyped UK startup.
  • CEO Will Shu set up the company after relocating to London and finding the takeaway scene dire.
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Anyone could have come up with the concept. An app that brings you food whenever and wherever you want? It's the kind of thing any irate worker eating a squashed sandwich at their desk could dream up.

Will Shu, the American cofounder and CEO of Deliveroo, knows this. He told the "i" newspaper in 2017 that the idea was "not complicated."

But it was Shu and his cofounder Greg Orlowski who turned the desk dream into a reality in 2013, founding Deliveroo to offer takeaway from a wide range of places on demand. The Deliveroo app has thousands of restaurants on its platform, many of which never offered delivery services before the startup came along.

Investors bought into the idea. The firm attracted huge investment from Amazon and a $7 billion valuation.

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On Wednesday, however, the company tested investor appetite for its business with a listing on the London Stock Exchange. Its first day was deemed a flop, with the share price tanking 30% and analysts and funds criticizing the firm's business model, which relies on a network of gig-economy riders to ferry out takeaway food to consumers.

Here's how Deliveroo grew from a simple idea to a publicly listed firm:

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2001: The Deliveroo founder Will Shu is a banking analyst in New York for Morgan Stanley, working long hours and eating $25 takeout with colleagues while pulling late shifts.

Will Shu Deliveroo resized
Deliveroo

2004: Shu moves to Morgan Stanley's offices in London's Canary Wharf neighborhood, where his takeout budget evaporates. He spends miserable evenings buying food from the local supermarket chain Tesco. "It just became really depressing," he said, according to Startups.co.uk.

Canary Wharf
REUTERS/Toby Melville

You can read Shu's account of Deliveroo's early days here.

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Late 2006: Shu is working at a hedge fund and his hours are more reasonable. Takeaway marketplaces like Just Eat are taking off, but Shu finds them lacking. "It was not a great customer experience," he said.

McDonald's eat
napocska/Shutterstock

Late 2007: Convinced he could do better, Shu contacts an old school friend of his, the developer Greg Orlowski. The pair try to come up with the first iteration of Deliveroo, but the concept just doesn't work. Part of the reason is that this was the very early days of smartphones, and apps had yet to take off.

steve jobs unveils first iphone
The first iPhone had only just come out, and apps were not a thing when Will Shu was first thinking about a new food marketplace.
AP
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June 2010: Shu goes back to the US and to school, taking an MBA at Wharton. "It was a way for me to drink for two years and hang out ... But it did give me time to think," he said.

Wharton school commencement
The Wharton School/Facebook

August 2012: Apple is about to release the iPhone 5, and the App Store has been going for four years. Rival smartphones are taking off. It's time to return to the concept of a marketplace that could deliver any food you want, wherever you want.

iPhone 5, iPhone 4
The iPhone 4 and the iPhone 5.
Reuters/Yves Herman
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February 2013: Shu and Orlowski team up again to build Deliveroo from Shu's Chelsea flat. They know that this will involve a big fleet of couriers to drop off the food and that they would need to communicate through an app. But they struggle to win support.

chinese food takeout
Sandip Bhattacharya/Flickr

February 2013: According to Shu, skeptics told him that English people didn't want good food delivered.

fish and chips
Flickr/Saaleha Bamjee
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Mid-2013: Will Shu works as Deliveroo's first "rider," picking up food from restaurants and delivering it to customers just to see how the experience works. His friends reportedly prank him by ordering food, just to see the former analyst working as a delivery boy.

Will Shu
Shu in a Deliveroo rider's distinctive, reflective uniform.
Deliveroo

Mid-2013: According to a Forbes profile, Shu once delivered a pizza to his former boss, who thought he had fallen on hard times. Shu said it was "fine" and scooted off without an explanation.

Costco pepperoni pizza food court
Yelp

According to Forbes, Shu would drive his scooter around for six hours a day to better understand delivery logistics.

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June 2014: After starting out with just three restaurants, Deliveroo raises its first $2.75 million funding round from Index and Hoxton Ventures. The money is going to be vital for the company's expansion.

Deliveroo
The early Deliveroo team. Shu is in the black t-shirt at the front.
Index Ventures

Late 2014: Deliveroo launches in Brighton, England, its first UK city outside London.

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Vladislav Gajic / Shutterstock
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January 2015: Deliveroo raises again and kicks off its international expansion. By April, it has launched in Paris and Berlin. The service does surprisingly well in Paris, a famously foodie city.

Croque Monsieur
Flickr / Alpha

You can read Insider's interview with Will Shu on Paris here.

Late 2015: After only two years in operation, Deliveroo is almost a unicorn and worth more than $600 million. It would take more than a year for the startup to reach the coveted $1 billion valuation, though.

Deliveroo courier
Sean Gallup/Getty Images
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December 2015: The backlash begins. Deliveroo has hundreds of cyclists peddling around dropping off people's takeaway food — except these riders are not directly employed by the company. The startup is drawn into the emerging debate about worker pay and conditions in the gig economy.

Deliveroo strike
Sam Shead/Business Insider UK

A damning Guardian article by Stefan Stern criticized Deliveroo's low wages and job security.

February 2016: The Deliveroo cofounder Greg Orlowski quietly leaves the company. He goes on to found Peanut, a meeting app for moms, with Michelle Kennedy.

Peanut
Peanut
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May 2016: Deliveroo starts talking about an ambitious plan to help restaurants process more takeout orders. It puts shipping containers in parking lots and turns them into mini-kitchens dedicated to preparing Deliveroo orders.

RooBoxes
James Cook/Business Insider

Read Deliveroo's explanation of its shipping container RooBoxes here.

August 2016: Deliveroo gets closer to unicorn status with a new tranche of $285 million in funding. It is now firmly one of the buzziest and best-capitalized British tech startups around, and well-loved by its users.

Deliveroo app
Deliveroo
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September 2016: The startup rebrands, abandoning its cute, cartoony kangaroo logo in favour of a geometric, abstract design. Some people think the new design looks a little like a rude two-fingered gesture.

Deliveroo logo
The new geometric Deliveroo logo, which is still intended to portray a kangaroo.
Deliveroo

September 2016: Mike Hudack, a former director of product management at Facebook, joins Deliveroo as its new chief technology officer.

Mike Hudack
Mike Hudack
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November 2016: The gig-economy problem blows up for Deliveroo. A small new union called IWGB, targeted at gig-economy workers, demands new employment status recognition from Deliveroo.

deliveroo
PA Images

Until now, all of Deliveroo's riders have been independent contractors, meaning they are not entitled to standard benefits. But union members want paid holiday and minimum wage, expensive benefits that could lose Deliveroo lots of cash.

January 2017: Deliveroo hires Thea Rogers, a former political advisor to ex-British Chancellor George Osborne, as political scrutiny of its business model grows.

Thea Rogers
Deliveroo
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April 2017: Deliveroo unveils Deliveroo Editions, pop-up kitchens for established restaurants that help them deal with takeaway requests.

Deliveroo Editions
Business Insider/James Cook

The company said at the time that "Editions" locations — mostly consisting of parking lots and other unglamorous areas — would include six or seven portable kitchens.

Read about the ambitious Deliveroo Editions plan here.

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July 2017: Deliveroo moves into a shiny new London headquarters, with an on-site gym, roof top and "centre court" meeting space.

Deliveroo office
A centre court meeting space that used for large team meetings — but not for sports.
Deliveroo

You can take a tour of Deliveroo's swanky offices here.

July 2017: Sky News reports rumours that the Japanese giant SoftBank is interested in investing in Deliveroo. A deal never materializes, possibly because the conglomerate went on to invest in a rival, Uber.

Masayoshi Son
SoftBank CEO Masayoshi Son. SoftBank would go on to take a big stake in Uber, which runs a competitor to Deliveroo, Uber Eats.
Koki Nagahama/Getty Images
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September 2017: A Deliveroo board member, Martin Mignot, causes a ruckus when he describes the startup's ultimate goal: to kill off home cooking. The firm ultimately wants to make takeaway an easier, cheaper option than prepping food at home.

Martin Mignot
Index Ventures partner and Deliveroo board member Martin Mignot.
Index Ventures

You can read about Deliveroo's 2016 financials here, and Martin Mignot's analysis of Deliveroo's future here.

September 2017: Deliveroo's valuation is pegged at $2 billion after it raises $385 million from investors including the US fund giants Fidelity and T Rowe Price. This cements Deliveroo's status as one of the most valuable startups in the UK.

unicorn
Deliveroo was one of the UK's most hyped unicorns.
AP / Leo Correa
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October 2017: Deliveroo begins to draw unfavourable comparisons to Uber, thanks to its tendency to bend the rules. The Guardian reports that the startup didn't ask council permission to create its pop-up kitchens and that local neighbours are complaining about the noise.

Deliveroo Root Men riders
Deliveroo

October 2017: Deliveroo warns that if it is forced to recognise its riders as employees, it might not be able to grow.

Dan Warne
Deliveroo UK MD Dan Warne.
UK Parliament

Deliveroo UK MD Dan Warne told politicians the company needed to be able to attract riders on a flexible basis; otherwise, costs would go up.

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November 2017: Will Shu tells Insider that going public would be "somewhat logical" for Deliveroo. At some point, his investors are going to want to see a return on their money.

Wall Street bull
The Wall Street bull.
Reuters/herval

You can read Will Shu on taking Deliveroo public and launching in America here.

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March 2018: Deliveroo lays out a radical plan to cut its margins, in a presentation obtained by the Eater blog. According to the report, the company eventually wants to provide its own food to cut costs.

chef food kitchen
Prarinya/Shutterstock

The startup also reportedly wants to automate delivery even more to cut its margins.

May-August 2018: Deliveroo focuses on the welfare of its riders, providing accident cover, first-aid training, and medical insurance globally.

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Deliveroo
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May 2018: Deliveroo announces that it will plow £5 million ($6.5 million) into finding celebrity chefs to partner with to create new experimental concepts.

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Ivana Lalicki/Shutterstock

Some money will also go towards Deliveroo's existing restaurant partners.

June 2018: Deliveroo, now operating in 12 countries around the world, says it will up its UK expansion to take on Shu's original bete noire Just Eat. The plan is to add 5,000 more restaurants to the Deliveroo app, and let outlets use their own delivery drivers.

Deliveroo CEO William Shu
Deliveroo

You can read about Deliveroo's summer expansion plans in The Telegraph.

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September 2018: Despite the rapid expansion, Deliveroo still hasn't launched in the US.

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September 2018: After months of chatter, media reports suggest Uber is in early talks to buy Deliveroo. The price would need to be above Deliveroo's previous valuation of $2 billion, and would merge two major players in food delivery.

Dara Khosrowshahi
Uber CEO Dara Khosrowshahi.
Getty
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May 2019: The talks with Uber came to nothing. But Amazon participated in a $575 million investment round, a war chest large enough to hold off the need for an IPO and fund a long-awaited move into the US. The deal makes Deliveroo Britain's largest unicorn tech startup, with a valuation north of $4 billion.

Jeff Bezos Amazon spheres
The Amazon founder Jeff Bezos.
JASON REDMOND/AFP/Getty Images

Amazon had been in search of a UK-based delivery platform for years, and had previously been in talks with Ocado.

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June 2019: Will Shu makes a rare public appearance after the Amazon investment, describing the firm as a "strategic" investor.

Deliveroo CEO Will Shu
Deliveroo CEO Will Shu at President Macron's tech summit in France in 2018. Shu said he was the only one who didn't turn up in a suit.
LUDOVIC MARIN / Getty

Shu appeared before an audience of entrepreneurs in June 2019, a month after the Amazon deal was announced, to discuss the firm's scaling.

He also discussed executive turnover, after the firm lost its CTO, Mike Hudack; chief people officer, Beth Clutterbuck; and chief legal officer, Rob Miller, in quick succession.

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July 2019: Insider publishes an investigation into Deliveroo's working practices, which surfaced HR complaints and a culture of long hours.

Deliveroo graphic
Samantha Lee/Business Insider

In July 2019, Insider published an investigation into the running of Deliveroo as it grew. Former employees painted a picture of long working hours and internal divisions in the engineering team.

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July 2019: The UK's competition authority hits pause on Amazon's funding of Deliveroo.

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Amazon CEO Jeff Bezos.
Drew Angerer/Getty Images

Amazon's backing of Deliveroo, which saw the firm take a 16% stake in the company, hit a major snag in the summer of 2019 after the UK's competition watchdog questioned the deal and put the funding on ice. The regulator would go on to launch a formal inquiry in December, essentially depriving Deliveroo of a much-needed chunk of working capital.

Specifically, the regulator worried that the investment would stop Amazon from ever launching its own competitor to Deliveroo and would put off smaller firms from entering the market.

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August 2019: Deliveroo pulls out of Germany.

A Deliveroo rider cycles through central London
A Deliveroo rider cycles through central London
Jack Taylor/Getty Images

Facing stiff local competition from Takeaway.com, Deliveroo abruptly decided to end its service in Germany in the summer of 2019. According to Bloomberg, German consumers don't order takeaway as frequently as in Deliveroo's home market of the UK, and the competition had already killed off smaller rivals.

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December 2019: Amazon and Deliveroo rubbish the regulator's complaints about competition.

GettyImages 1230935623 An Amazon.com Inc. delivery driver carries boxes into a van outside of a distribution facility on February 2, 2021 in Hawthorne, California. - Jeff Bezos said February 1, 2021, he would give up his role as chief executive of Amazon later this year as the tech and e-commerce giant reported a surge in profit and revenue in the holiday quarter. The announcement came as Amazon reported a blowout holiday quarter with profits more than doubling to $7.2 billion and revenue jumping 44 percent to $125.6 billion. (Photo by Patrick T. FALLON / AFP) (Photo by PATRICK T. FALLON/AFP via Getty Images)
Amazon has faced criticism over its extensive surveillance of workers and its safety record.
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Amazon and Deliveroo fought back against the UK competition regulator's ongoing investigation — saying that neither firm competed with the other. They said the regulator had conflated casual takeaway services with online grocery delivery, where Amazon does operate.

 

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January 2020: Deliveroo faces growing scrutiny in Europe over its labor practices.

Deliveroo riders gathered August 11, 2017, in Paris to demand an increase in pay for additional travel
Deliveroo riders gathered August 11, 2017, in Paris to demand an increase in pay for additional travel.
JACQUES DEMARTHON/AFP via Getty Images

Deliveroo continued to come under scrutiny for its reliance on gig-economy riders who are not entitled to the minimum wage or holiday pay. Critics compared Deliveroo to Uber, arguing that the firm is able to attain business and a high valuation only thanks to a reliance on regulatory loopholes in employment law.

In January 2020, Belgium's labor authority kicked off a court case investigating the legal employment status of Deliveroo's riders in the country.

An Italian inquiry, which kicked off in 2019, would go on to order Deliveroo to pay a fine over its riders' working conditions and to employ them full time.

A British union for gig-economy workers, the IWGB, would also go on to challenge Deliveroo on its riders' employment status. It lost a court fight, but as of March 2021, is appealing the decision.

Deliveroo faces similar disputes in the Netherlands and in Spain.

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March 2020: Deliveroo still does not have its cash from Amazon and goes to war with the UK's competition regulator.

Kangaroos fighting punching
Musa Ozturk/Anadolu Agency/Getty Images

The UK's competition investigation into Deliveroo became more fraught with the onset of COVID-19, with Deliveroo and its investors arguing that the nearly yearlong investigation made little sense.

Outwardly, investors were arguing that the firm didn't deserve the scrutiny because it was "helping" during the pandemic, by delivering medicine and food to the vulnerable.

A more pressing reason may have been Deliveroo's clear need to access its funding, as lockdowns put an immediate freeze on business.

Insider wrote at the time that the pandemic was "both an opportunity and a threat to services like Deliveroo."

It continued: "People may turn to delivery apps to source groceries or takeaway food.

"But some big restaurants have yanked their services from takeaway apps entirely as they close for lockdown. McDonald's and Nando's are among the big names that have shuttered operations entirely in the UK, including takeaway services."

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April 2020: The regulator provisionally clears the Amazon-Deliveroo deal after Deliveroo warns it might go bust.

coronavirus mask london
Deliveroo said the lockdown had an immediate and deleterious impact on its business, though it would go on to recover.
Getty

About a month into the UK's first pandemic lockdown, the UK's competition regulator gave a provisional green light to Amazon's investment in Deliveroo, and would eventually give it the full go ahead. Clearance came after the startup issued an 11th-hour warning that it might collapse without access to the funding, given a coronavirus-induced freeze in business.

Deliveroo went on to make a turnaround. The continued lockdown saw restaurants turning to delivery platforms to keep their businesses running. Consumers bored by their own home cooking also increased their takeaway orders.

September 2020: IPO rumors begin circulating.

Will Shu, Deliveroo's CEO and founder, inaugurating its first Deliveroo kitchen site in France, called Deliveroo Editions, on July 3, 2018, in Saint-Ouen, France.
Will Shu, Deliveroo's CEO and founder, inaugurating its first Deliveroo kitchen site in France, called Deliveroo Editions, on July 3, 2018, in Saint-Ouen, France.
Aurelien Morissard/IP3/Getty Images

About six months into the pandemic, sources close to Deliveroo told Insider that the food-delivery firm was in early-stage discussions for a public listing — a mark of how its business had turned around during the pandemic. The business would still post a full-year loss, but also a 54% increase in revenue. Its US peer DoorDash would, in December, go on to make a strong debut on the New York Stock Exchange.

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April 2020: A squeezed Deliveroo axes 300 staff members as the pandemic bites.

Deliveroo rider mask
A Deliveroo food-delivery cyclist in Liverpool, England, on October 2, 2020.
Oli Scarff/Getty

The extent of Deliveroo's difficulties during the early stages of the pandemic became clear when The Telegraph reported that the company would ax 300 staff members and put 50 on furlough, despite provisional clearance of its funding by the competition watchdog. The company said the pandemic made it tough to predict demand.

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May 2020: Deliveroo explores grocery delivery, partnering with big retailers.

Deliveroo Waitrose
Deliveroo

Mostly known for takeaway, Deliveroo moved toward grocery delivery in 2020, capitalizing again on a pandemic shift in people's shopping habits. Reuters reported that online grocery-delivery penetration doubled to represent 16% of all grocery retail in the UK.

Deliveroo struck deals with the Co-op, Waitrose, Aldi, and smaller retailers through 2020 to provide grocery delivery services.

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December 2020: Deliveroo loses $310 million for the full year.

Food delivery apps
Food-delivery apps.
Jakub Porzycki/NurPhoto via Getty Images

Deliveroo's results for its full-year 2020 revealed losses of £225.5 million ($310 million) despite the pandemic boom. That was a narrower loss than the £317.7 million ($438 million) it lost in 2019. Revenue was up 54% to £1.1 billion ($1.5 billion) from 2019.

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March 2021: Deliveroo confirms it's going public — and faces investor backlash.

David Cumming Aviva
David Cumming, the chief investment officer at Aviva, was the first major fund manager to say he wouldn't back Deliveroo, citing its gig-economy model.
Aviva

In March 2021, Deliveroo confirmed plans to float on the London Stock Exchange. That followed months of rumors, with insiders saying its target valuation was as high as $13 billion.

The initial public offering would be a test on numerous fronts: For UK investor appetite for high-risk, high-growth and unprofitable companies; for gig-economy startups; and for Deliveroo's dual-class share structure.

Early warning signs that a London listing may not go smoothly came in the run-up to the IPO when major fund managers said they would not invest in Deliveroo, citing its lack of profitability, governance questions, and its reliance on a gig-economy rider model.

 

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March 2021: Deliveroo goes public, but the stock collapses minutes after the market open.

Will Shu Deliveroo
Reuters

Deliveroo priced its IPO at the lower end of its range, at 390 pence a share, giving it a £7.6 billion ($10.5 billion) valuation and raising £1.5 billion ($2 billion).

The company tanked by as much as 30% in the first minutes of trading, wiping millions off its valuation and marking the worst first-day performance for a UK listing in decades.

One analyst, AJ Bell's Russ Mould, branded the listing "Flopperoo."

Some observers noted that a single day of trading was not enough to wipe Deliveroo's IPO off as a disaster.

But its US peer DoorDash's stock price is down by 40% from a peak of $215.16 a share in February, and Deliveroo may have timed its IPO poorly as investors predict a vaccine-driven return to relative normality this summer.

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Deliveroo ultimately raised the cash it needed, and its future performance will partly depend on the world post-pandemic.

Deliveroo rider coronavirus
Matthew Horwood/Getty Images

A now-public Deliveroo covers 12 markets globally, has more than 100,000 delivery riders, and has 115,000 restaurant partners on its platform.

CEO Will Shu will retain control of the business, thanks to the firm's dual-class share structure that gives him greater voting rights than other shareholders.

In his letter to prospective investors, Shu declared: "I never set out to be a founder or a CEO. I was never into start-ups, I didn't read TechCrunch. I'm not one of those Silicon Valley types with a million ideas. I had one idea."

That future success of his idea will depend on the world's appetite for takeaway amid vaccine rollout, and regulatory appetite for his firm's gig-economy model.

This story was originally published on September 28, 2018, and has been updated since then.

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