My dad had one piece of advice he came back to more than any other. 

It sounds simple. It isn't. The majority of us are wired to react to what's in front of us - the good quarter, the big opportunity, the moment that feels like it demands a decision right now. 

The long view requires you to deliberately ignore some of that noise and ask a harder question: is this sustainable, or is this just the moment being kind to me?

In business, that distinction matters more than almost anything else. Markets shift. Conditions change. The thing that made your numbers look incredible last year can disappear without much warning. And if you've built your entire strategy - or your entire valuation - around conditions that were never going to last, you tend to find out the hard way.

Deliveroo found out the hard way.

1/ Deliveroo raised $2.95B across 12 funding rounds and listed on the London Stock Exchange at a £7.6B valuation. By 2025, it had agreed a sale to their biggest US competitor, DoorDash, for £2.9B - a drop of over 60%.

2/ The underlying business was never really built to justify that number. Thin restaurant margins, rising rider costs and demand that evaporated the moment lockdowns ended. The conditions that made it look exceptional were always temporary - the valuation just never reflected that.

3/ Raising at the highest possible valuation feels like winning. In reality, it's a promise. Every pound on that number is a commitment to investors that you'll grow into it - and if the business can't deliver, that number becomes a ceiling you're trapped under rather than a milestone you've passed.

4/ The best raise isn't the biggest raise. It's the one where the valuation reflects where the business actually is, leaving room to grow into the next number rather than spending years trying to justify the last one. Deliveroo never had that room. The gap between what they promised and what the business could realistically deliver was visible from the start - it just took a few years and the end of a pandemic for everyone to see it clearly.

Will Shu was a banker working in London in 2013. He was ordering food to his desk most nights and couldn't understand why decent restaurants didn't deliver. 

So he started doing it himself - literally riding a bicycle around London, delivering food from local restaurants that had no delivery operation of their own. That was the early days of Deliveroo.

We’re so used to it now that it sounds like an obvious concept.

But Shu had actually built a piece of infrastructure that didn't exist before: a logistics layer sitting between restaurants and customers, making delivery possible for places that could never have done it on their own.

Before apps like this existed, getting a restaurant meal delivered to your door was either a pizza or a logistical effort involving a phone call, a wait and a lukewarm result. 

Deliveroo made the process frictionless. A restaurant in your area, in under an hour, without leaving the sofa. No effort required, really - just tap and wait.

By 2019, Deliveroo was operating in twelve countries, working with over 80,000 restaurants and processing millions of orders a month. It had already raised hundreds of millions in funding and was being talked about as one of Britain's most exciting tech companies.

Then COVID happened.

And if Deliveroo was popular before lockdown, what followed was something else entirely. Restaurants closed, people couldn't leave their homes and the entire country - bored, stuck indoors and tired of cooking - turned to their phones. Millions of households who'd never used it before suddenly had a Deliveroo order on the go every Friday night. It became a ritual. Demand went through the roof.

The numbers Deliveroo was reporting in 2020 and into 2021 looked extraordinary. Because they were - just not necessarily for the reasons everyone assumed.

Amazon had already been a Deliveroo investor since 2019, when it led a £575M funding round that was held up by the Competition and Markets Authority for almost a year. 

By January 2021 - with demand at its peak - Durable Capital and Fidelity came in with another $180M. By the time Deliveroo listed on the London Stock Exchange in March 2021, the company was valued at £7.6B. 

Across its funding rounds, they had raised $1.7B in total. Some of the biggest institutional investors in the world had backed them.

On the surface, it made complete sense. The numbers were incredible. The brand was everywhere. The whole country had spent the better part of a year ordering from their sofas, and there was no obvious reason to think that was going to stop.

The thing is, though, when investors see a business growing fast during an unusual period, they don't really sit back and ask "how much of this is going to last?" What actually happens is closer to rationalisation. 

They look at the trajectory, they look at the narrative - this is the new normal, this is what the future looks like - and they build a case around it. Everyone in the room is doing the same thing, and there's nobody on the outside with a different view pushing back.

That's the risk of private markets. There's no broader pool of investors stress-testing the assumptions. Just a cap table full of people who've all committed to the same story.

And the story had some stubborn problems hiding underneath it.

Restaurants were already running on razor-thin margins - there was never much money to go around in that supply chain in the first place. Rider costs were going up as minimum wage increases and tax changes kicked in. And the demand itself? It was being driven by a set of conditions that were, by definition, temporary. 

The moment lockdowns ended, people went back to restaurants, back to cooking, back to normal. The orders dropped.

The whole valuation had been built on circumstances that were never going to last. And when those circumstances changed, there was nothing underneath to hold it up.

By 2025, the board was recommending a £2.9B takeover by DoorDash - an American food delivery company buying its way cheaply into the European market. From £7.6B to £2.9B. Investors who got in at the IPO lost nearly two thirds of what they put in.

For any UK business owner with a capital raise on the horizon, remember:

Deliveroo rewired how millions of people think about food. I made a similar point about Klarna a few issues back - what made them so compelling to investors was that they made spending easier. Buy now, pay later removed the friction between wanting something and having it. Deliveroo did the same with food. When a business engineers a new behaviour that sticks, it can look unstoppable.

Here's the problem, though. Engineered behaviour and a viable business are not the same thing. Deliveroo changed how people ate. It just never quite figured out how to make money doing it. Restaurants on thin margins, riders getting more expensive, a platform taking a cut in the middle - the more orders they processed, the more money they lost. The behaviour was sticky, but the business model? Not so much.

Before you raise, understand which one you actually have.

This is the hardest one to spot when you're inside it, because tailwinds don't announce themselves. At the time they just look like growth. The entire country was locked indoors, unable to go to restaurants, with nothing to do but order food to the sofa. 

Of course Deliveroo's numbers looked phenomenal. But the question nobody paused to ask was - what do these numbers look like when the world goes back to normal? 

The best businesses are built to function in any environment - boom, bust, pandemic, recovery. Deliveroo was built for a world where nobody could leave their house, which - thankfully - had an end date.

Before you build a raise around your current trajectory, ask yourself honestly whether that trajectory exists without the conditions that currently surround it. If the answer is uncomfortable, that's useful information - and it's worth sitting with before you walk into any investor conversation. 

It's actually one of the first questions we work through with businesses at FundOnion before matching them with a lender. You'd be surprised how often the honest answer changes the entire approach.

Raising at £7.6B felt like a win. And in the moment, it was: validation, headlines, serious investors, a place in the record books as one of Britain's biggest ever tech listings.

But a valuation is also an obligation. What you're telling your investors is: we will grow into this number, and then beyond it. When the fundamentals aren't there to support that, you end up in a very difficult position. You're under pressure to spend in ways that justify the number rather than grow the business properly. You make decisions based on what the valuation demands rather than what the business actually needs. That pressure is real, and it changes things.

If the conditions that justified your valuation at the time of the raise were temporary, you're going to feel it.

I say this all the time: The best time to raise - whether that's equity or debt - is when you don't need to. 

When your cash flow is strong, your balance sheet looks healthy and you're not coming to market with your back against the wall. That's when you get the best terms. That's when investors are most interested. That's when you have the leverage to push back on the things that don't work for you.

Deliveroo raised $180M in August 2020 at the absolute peak of artificially inflated demand. It looked like perfect timing. In hindsight, it was a questionable moment to set a number they'd spend years trying to live up to.

Amazon. Fidelity. Durable Capital. Twelve funding rounds. A London Stock Exchange listing. And it still ended in a sale at a fraction of the original price.

None of this is to say Deliveroo failed. They built a product millions of people (still) use every week, grew it globally and got to profitability eventually. The problem was never the product - it was the number they put on it at the top of a pandemic-inflated market. 

Serious investors give you credibility and more time to figure it out. They don't fix a valuation that was too high to begin with. At some point, the price someone is willing to pay catches up with what the business is actually worth. For Deliveroo, that point was a 60% drop.

Deliveroo had the brand, the distribution, the backing and the headlines. What it didn't have was a business that could justify its own valuation once the world went back to normal.

The raises that look like wins in the moment aren't always the ones that look like wins five years later. And the raises that feel modest at the time - done from a position of strength, at the right valuation, with the right structure - tend to be the ones that actually set a business up for what comes next.

If you're thinking about a capital raise and want to make sure you're building on something that holds - drop me an email: [email protected]

Till next time,

James