SVB collapse vindicates move to go public, says Deliveroo

DELIVEROO’S boss has said the collapse of Silicon Valley Bank shows it was right to go public despite the takeaway app’s value dropping 80pc since its listing.

Will Shu, chief executive, said the bank’s collapse threatened to create more problems for privately held tech rivals in raising the cash they needed to subsidise losses.

“I don’t think SVB helps the situation in terms of risk appetite for private investors [and] I do think it will be difficult for [them],” Mr Shu said.

SVB’S collapse over the weekend sparked chaos among technology start-ups and the ongoing uncertainty is expected to hold up further investment.

In comparison, Mr Shu said Deliveroo was sitting on more than £1bn in cash after its 2021 flotation.

“They’re still holding on to these big valuations that are going to have to come down at some point,” he added. “[After the float] I’m sitting on a balance sheet with over $1.2bn (£1bn). I view that as a good position to be in.”

Deliveroo’s £7.6bn listing at 390p per share was London’s largest in a decade, but prices crashed by a third on its first day. The company has lost almost 80pc of its listing price since then. The valuation drop has come amid declining optimism around takeaway apps as coronavirus lockdowns lift and the cost of living crisis bites, leaving start-ups struggling for funding or forced to sell themselves. The likes of Gorillas and Dija have already been snapped up by larger companies.

Mr Shu said yesterday that rising food inflation had affected the company’s growth. Gross transaction value – the amount consumers spend on the app – rose by 9pc last year, compared to 70pc in the previous year. Deliveroo expects the measure to remain flat in the first quarter of the year and to grow by low-to-mid single digits in 2023.

Last month Deliveroo laid off 350 staff – almost one in 10 workers – as part of a cost-cutting effort as it exited markets including Australia and Holland.

Deliveroo said it was making progress towards profitability. It said it had broken even on an adjusted Ebitda basis in the second half of last year. Its shares fell by 0.8pc to 89p in late trading.