Delivery App Favor Grabs $13M Series A for National Expansion

Favor, the app that offers to deliver anything, is starting off South By Southwest with some big news: a $13 million Series A financing.

The Austin, TX-based company, which is focused on delivery from grocery stores and restaurants, is going to use the money to improve customer service and expand into more new cities, with San Antonio, TX, and San Diego next on the list. It already offers service in Boston, Houston, and Dallas.

The funding, announced this morning, was from Austin venture capital firms S3 Ventures and Silverton Partners. Tim Draper, the noted venture capitalist who brought Favor into his California incubator program Boost VC in 2012, and other angel investors also participated. Draper and Silverton provided Favor with $2 million of seed funding in September.

Favor has been steadily building its business by adding new cities and recruiting more delivery people, who it calls “runners.” Delivery apps are plentiful, as I noted when I spoke with cofounder Zac Maurais in January.

Yet Favor seeks to stand out by centering itself around impulse buys. It lets you name the food or grocery item you might be craving, as well as the store you might want it from. Its runners then seek it out and deliver it. They stay in touch via text message, too, in case something isn’t available.

Favor charges a fee for the delivery of $5 to $6, plus a percentage of the total order. Instacart also charges fees of about $4 to $6, and it marks up the price of the items listed on its website compared with what’s in the store. And there’s also the tip for your delivery person.

Companies such as GrubHub Inc. (NYSE: GRUB), which owns Seamless and GrubHub, have been around for years. Other new delivery services are popping up, too, such as Instacart to Drizly. Instacart allows you to virtually stroll the aisles of a grocery store, and grab items you might want delivered as you see them.

Last month, My colleague Jeff Engel analyzed the deal-making activity in the food-ordering world through the lens of EatStreet, a Madison, WI-based online ordering startup.

Maurais first launched Favor with Ben Doherty in Austin in 2013.

David Holley is Xconomy's national correspondent based in Austin, TX. You can reach him at dholley@xconomy.com Follow @xconholley

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