The likelihood of food delivery companies DoorDash and Instacart filing for an initial public offering in the near-term improved after voters in California supported Proposition 22, CNBC reported Thursday.
What Happened: DoorDash and Instacart are considered two of the top IPO candidates in 2021 and may have an easier path forward after the passage of Proposition 22 in California.
Proposition 22 allows most drivers for app-based transportation and delivery companies to continue operating as independent contractors. DoorDash spent $48 million to promote the benefits of Proposition 22, while DoorDash spent another $27 million.
Related Link: Checking In With Food Delivery Startup Chowbus Following $33M Series A Round
"Californians sided with drivers, recognizing the importance of flexible work and the critical need to extend new benefits and protections to drivers like Dashers," DoorDash CEO Tony Xu told CNBC.
"We look forward to partnering with workers, policymakers, community groups and more to make this a reality."
Why It's Important: Both companies have direct exposure to one of the hottest segments during the COVID-19 pandemic: food delivery.
the two companies had no problem raising new capital in the private market.
Instacart raised $200 million at a $17.7-billion valuation in October, while DoorDash raised $400 million at a $16-billion valuation four months prior.
What's Next: The passage of Proposition 22 certainly eliminates a "huge cloud hanging over their head" and bodes well for investor demand as part of a potential IPO process, Larry Albukerk of EB Exchange Funds told CNBC.
Photo courtesy of Instacart.
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