Instant delivery company Gopuff, which delivers food, groceries and alcohol to customers within 30 minutes, plans to lay off several hundred employees, according to The Information.
The planned reduction of 3% of Gopuff’s workforce comes after the company implemented a hiring freeze earlier this month and dealt with the resignations of several key executives, The Information reported. According to a source who was briefed about the move, the cuts are part of the company’s effort to shave down annual headcount costs by at least $40 million.
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For those wondering about the reason behind the layoffs, it’s important to note that Gopuff has hinted heavily at an IPO as early as mid-2022. The rapid delivery provider raised $1.5 billion in funding through a convertible note, a popular path for startups looking to go public because it exchanges debt for financing.
Significant layoffs before an IPO are not uncommon, as companies often attempt to trim down losses on their bottom lines. Startups Wag and Fair.com both made major cuts to their workforces after obtaining major institutional funding, looking to continue rapid growth by reducing labor costs.
In Gopuff’s case, that growth is through the roof. In July, the company closed a series H funding round that brought its total valuation above the $15 billion barrier. Two weeks later, it acquired U.K.-based Dija, giving the Philadelphia-based instant delivery app its first European presence.
Read: Gopuff raises $1.5 billion in anticipation of 2022 IPO
Read: Instant delivery company Gopuff reaches $15B valuation
Those moves, plus the anticipated layoffs of hundreds of employees, have pushed Gopuff’s pre-IPO valuation to as high as $40 billion. For context, the largest-ever U.S. IPO came in 2014, when Alibaba went public with a valuation of nearly $22 billion. If analysts are right about Gopuff’s valuation, it would smash that record.
So why is Gopuff valued so highly? For one, it sets itself apart from big names like Uber Eats and DoorDash because it owns all of its inventory, which allows it to charge lower delivery fees to customers. Gopuff’s supply of snacks, drinks and other items is spread out among 550 microfulfillment centers in the U.S. and U.K., which gives the company the added advantage of reduced transit times since it can store its product closer to customers.
As of publication time, Gopuff has not responded to Modern Shipper’s request for comment.
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