App-based delivery service Favor said Thursday it has achieved profitability – the same day the Austin company revealed it had landed $22 million in Series B funding.
Favor, which launched in 2013, says it is the first on-demand delivery company in the U.S. to become profitable. Its primary focus is on food deliveries from area restaurants, although Favor runners perform a number of other tasks such as popping into grocery stores or pharmacies to grab an item or two for customers.
In addition to Austin, the company currently operates in a number of other Texas cities, including College Station, Dallas, Fort Worth, Houston, Katy, San Marcos and The Woodlands.
“Scaling a high-touch, hyper-local logistics business is no easy task, and all the credit goes to our team’s relentless focus executing on our strategic growth plan,” Favor president and CEO Jag Bath said in a written statement. “Achieving profitability at this scale, and the vote of confidence from our existing investors, is validation of what we are doing and underscores the future of the on-demand economy.”
The latest round of funding was led by an existing investor, S3 Ventures. S3 Ventures was the lead investor in a 2015 round of Series A funding that brought in $12 million.
Other participants in that first round included Silverton Partners and noted venture capitalist Tim Draper.
“Favor has proven that they are building a healthy, scalable business, while maintaining their superior service and strong position in the on-demand delivery market,” S3 Ventures managing director Brian Smith said. “The company’s decision to avoid growth at all costs to instead focus on surgical, smart growth has led them to beat their profitability goal by six months — a truly impressive achievement. We remain excited and confident in Favor’s future as they build upon this success.”
Favor will use the new funding to expand its footprint throughout Texas and possibly into other states. If that happens, it won’t be the first time Favor has operated outside Texas. It was previously in a number of major cities in the U.S. and Canada – including Boston; Charlotte, N.C.; Denver, Colo.; and Toronto – but retrenched amid competition from other startups such as Postmates and DoorDash.
Favor says it has made 6 million deliveries over the past four years and anticipates completing 4.5 million deliveries in 2017 alone. The company says it is on track to help Texas businesses generate $100 million in sales this year alone.
To help with that growth, Favor is looking to add 25,000 additional runners.