Amazon makes major investment in Deliveroo

Amazon is set to make a major investment in the British delivery giant Deliveroo as it continues to explore new ways to expand its delivery network.

According to Sky News, Deliveroo is set to launch a $575 million (£450 million) funding round which will be led by Amazon.

Despite Deliveroo confirming this morning that Amazon will be the lead investor, details of exactly how much it is due to invest or what stake it will hold in the delivery company have not yet been revealed.

Deliveroo, which now operates in 14 countries after being launched in the UK in 2013, said it will use the funds to expand its technology team at its London headquarters, and develop new tool to “offer riders flexible and well-paid work”.

READ MORE: Amazon offers $10k to employees to quit their job and start a delivery business

When the latest funding round, which will also include T Rowe Price, Greenoaks and Fidelity as investors, is complete Deliveroo will have raised a total of $1.53 billion (£1.2 billion).

The Telegraph reported in September that Amazon had previously made two preliminary approaches to Deliveroo.

This comes as Uber Eats, Deliveroo’s key rival which is also understood to have explored purchasing the company, floated in on the New York Stock Exchange.

It also marks a shift in strategy from Amazon, which attempted to rival Deliveroo and Uber Eats with its own service Amazon Restaurant.

This service was scrapped in the UK in December, though it is still operational in the US.

“They (Amazon) weren’t able to compete within the market so they’ve gone for the buying option instead,” Hermes fund manager Louise Dudley told the BBC.

“(Deliveroo) is not just a food delivery company it’s very much a tech company. They have this tech platform that is seen as very attractive. They are able to expand into new areas and think about how people’s tastes are evolving and be able to predict what stores will be successful. That predictive growth is very attractive to Amazon”.

Amazon has also recently launched a series of dramatic initiatives aimed at expanding its delivery network, including announcing investment of nearly $1 billion to half its Prime delivery times, and offering its staff $10,000 and three months wages to leave their job and start their own delivery business.

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