Wonder Eyes $9 Billion Valuation Ahead of IPO
Food delivery company Wonder is raising hundreds of millions of dollars in a funding round valuing the business at $9 billion. It is offering investors a safety net ahead of an expected initial public offering.
Wonder, the parent company of meal preparation and delivery services like GrubHub and Blue Apron, is reportedly seeking hundreds of millions of dollars in a new funding round that values the business at $9 billion. This round is anticipated to be Wonder's last private fundraising effort before a potential initial public offering (IPO).
Founder and CEO Marc Lore is reportedly courting investors for this round, which is expected to include a significant personal investment from Lore himself. According to reports, Wonder has agreed to provide investors in this round with additional shares if the IPO stock price falls below 1.5 times the price paid in this current funding round. This clause, known as an IPO ratchet, is designed to protect late-stage investors.
The IPO ratchet mechanism aims to shield institutional buyers from dilution if the public market listing prices below previous private financing valuations. Lore has committed $200 million of his own capital to the raise, and internal communications suggest an IPO could occur as soon as next year.
However, financial experts express caution. Jay Ritter, director of the IPO Initiative at the University of Florida, stated that the IPO ratchet offers investors substantial downside protection. He suggested that the reported $9 billion valuation may effectively be worth less than $6 billion, citing that "overstatements of true value are common for unicorns such as Wonder."