Why most startups don't IPO

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The IPO That Lost $2 Billion

Deliveroo, a UK-based food delivery service, has become one of Europe’s most recognized startups, disrupting the food delivery market in the UK and 11 other countries.

Valued at over $5 billion, their March 2021 IPO was one of the most anticipated public offerings in the UK. However, it quickly turned disastrous, resulting in a $2 billion loss for the startup.

From Concept to Growth

The idea for Deliveroo was born from Will Shu’s personal frustration with the quality of food delivery options in London. After moving to the city from New York, Shu, who had worked in finance, noticed a gap in the market for high-quality food delivery.

He teamed up with Greg Orlowski, a childhood friend and software developer, to launch Deliveroo in 2013. The two personally started delivering food in London to understand the customer experience firsthand.

Two years later, the founders had expanded Deliveroo to over 30 cities across the UK and Ireland, raising close to $100 million for this idea.

High Expectations, Harsh Reality

By 2021, Deliveroo had grown to millions of users across 12 countries, partnering with thousands of restaurants. However, the company was far from profitable, needing more capital to continue its aggressive expansion and fend off growing competition.

Their IPO was also driven by intense pressure from investors wanting to see a return on investments. The goal was to raise more than $1.5 billion, with a valuation of $8 billion, making it one of the most anticipated IPOs in the UK.

Losing $2 Billion In One Day

However, the timing couldn’t have been worse. The market was increasingly wary of tech stocks, particularly those like Deliveroo, which were unprofitable and heavily reliant on rapid expansion. The gig economy model, central to Deliveroo’s operations, was also under intense scrutiny.

On the first day of trading, Deliveroo’s shares plummeted by 30%, wiping out nearly $2 billion from its market value, quickly becoming one of the worst IPO debuts in London’s history.

What was expected to be a major success for the startup turned into its biggest failure, highlighting the challenges startups face when going public—especially in Europe, where investors began comparing Deliveroo to more established, profitable companies.

Although Deliveroo is now profitable, the continuous drop in its stock price has more than halved its valuation which now sits at $2.6 billion.