DoorDash, the app-based food-delivery service, is in talks with banks about arranging a credit facility of about $400 million ahead of a possible initial public offering, according to people with knowledge of the matter.
The San Francisco-based company may seek to offer shares as early as next year, said the people, who asked not to be identified because the plans aren’t public. JPMorgan Chase & Co. is leading the potential financing ahead of the IPO, the people said.
Closely held DoorDash, which counts SoftBank Group Corp. as a major backer, is valued at $12.6 billion after raising $600 million from investors in May. DoorDash — which competes with the likes of GrubHub Inc. and Uber Technologies Inc. — announced a deal earlier this month to buy Square Inc.’s food-delivery service, known as Caviar, for $410 million.
Securing a credit line from Wall Street often precedes an IPO. Companies going public routinely reward banks that make big credit commitments with roles in their IPOs, with lenders sometimes offering better terms on the financing in return. Banks are helping WeWork Cos. line up as much as $6 billion of debt in a financing that depends on the company raising at least $3 billion from its IPO.
DoorDash was started in 2013 by Stanford University students Andy Fang, Evan Moore, Stanley Tang and Tony Xu, the company’s chief executive officer.
A JPMorgan spokeswoman declined to comment, and a representative for DoorDash didn’t respond to requests for comment.
Like many of its rivals, DoorDash has a network of contractors who drive or bike around town, ferrying Thai food, salads and burgers to customers. Last year, it emerged as SoftBank’s pick from within the crowded field: the Japanese conglomerate led a $535 million investment in the company. DoorDash then raised $1.25 billion more, all in the past year.
DoorDash faced repeated criticism about its policy around customers’ tips, which the company used to subsidize what it paid workers. Customers felt misled when they realized they were helping offset DoorDash’s costs. Last month, Xu said it would change the policy and start passing on tips in addition to pay.