DoorDash Capital Warrants No Mention in Latest Report
May 23, 2022Readers interested in hearing the results of DoorDash’s foray in to MCA funding were keenly disappointed by the last earnings call. It didn’t even come up. The product was formally announced by DoorDash on February 9th. At the time, the company said that it was offering DoorDash merchants MCAs through a partner company named Parafin. The offers would be visible right in the DoorDash portal.
DoorDash reported Q1 revenue of $1.5B and a net loss of $167M. The material impact of DoorDash Capital, only in its infancy, was likely minimal then.
DoorDash Now Offers Merchant Cash Advances
January 19, 2022
DoorDash has made its way into the small business financing game. DoorDash Capital, as the financing arm is so named, claims to provide merchant cash advances to DoorDash partners against future sales orders placed through the DoorDash app.
The DoorDash website explains the product in detail.
“There is no interest rate because a merchant cash advance is not a loan,” the website says. “There is a fixed fee stated up front which will be collected together with the capital advance. Your fee will never change after you have accepted the offer.”
All of these deals are processed through Parafin, a Silicon Valley-based funder who was started by former Robinhood data scientists and engineers. They spoke to the Wall Street Journal in September about their launch and the onboarding of their first customer, Mindbody.
As a software provider with a financing arm of their business, Mindbody reportedly uses Parafin’s funds to provide financing through Mindbody Capital. When speaking to the Journal, Parafin’s Chief Executive Sahill Poddar said that Mindbody customers would pay fees between 6%-15%.
“We are categorically distinct from online lenders,” Poddar told the Journal.“We only get paid back when the [small business] makes sales.”
It’s still unclear the amount of DoorDash merchants getting financing from DoorDash Capital. From the looks of it, the program is still in its infancy.
When AltFinanceDaily reached out to DoorDash for a progress report on the program, the company declined to speak. “No comment at this time,” said a DoorDash representative when asked about the progress, usage, and ideas behind DoorDash Capital.
“Our goal is to provide our partners with fair, fast and convenient financing,” the DoorDash website says. “To help partners gain access to additional capital, we partnered with Parafin, a business financing provider, to offer cash advances that you pay back automatically with your DoorDash sales. You can use the capital for inventory, payroll, rent, marketing or for your cash flow needs.”
