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Exclusive: Delivery Collective raises $3.8M for white-label delivery

Illustration of a gig worker on a bicycle riding up the side of a hundred dollar bill that's been tilted to mimic a steep slope.

Illustration: Aïda Amer/Axios

Last-mile delivery software company Delivery Collective raised $3.8 million to help small businesses avoid exorbitant delivery fees, CEO Bala Subramaniam tells Axios exclusively.

Why it matters: Delivery service fees and other hidden surcharges have drawn the ire of both customers and regulators.

Zoom in: The seed round was led by defy.vc and Bling Capital, joined by Pathbreaker Ventures, GTMfund and 640 Oxford Ventures.

  • Proceeds will go toward supporting its fleet of drivers. Delivery Collective operates in three delivery markets around the San Francisco Bay Area.
  • The company hopes to go from serving over a dozen restaurants to over 100 restaurants in the near future, Subramaniam says.

Zoom out: "There's clearly a need for a shared merchant for white-labeled delivery infrastructure," says defy.vc general partner Bob Rosin, adding the opportunity exists for verticals outside food delivery.

How it works: The company offers restaurants white-label technology and operational infrastructure to deliver products to their customers.

  • Delivery Collective doesn't charge on the delivery itself; it has a tiered system based on the order amount restaurants fulfill, provided the restaurant pay Delivery Collective's drivers, Subramaniam says.

The big picture: Delivery platforms like Uber Eats and Grubhub often add delivery and service fees that get passed onto the consumer.

  • This leaves merchants receiving only a fraction of the actual cost of the order — and without the customer data.
  • Plus, the data stays with the merchant, Subramaniam says

The bottom line: Delivery Collective's main goal is to "decentralize this notion of online ordering and delivery to the restaurants and make sure that they understand the full cost," Subramaniam says.

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