Microsoft is the first US-based investor in Uber known to have backed CloudKitchens, the “dark kitchen” start-up run by the ride-hailing company’s controversial co-founder Travis Kalanick, according to two people with knowledge of the investment .
The investment was part of CloudKitchens’ $850 million funding round that closed in November 2021, a combination of debt and equity that valued the Los Angeles-based company at $15 billion, the people said.
Since receiving the cash boost, CloudKitchens has been able to ramp up its growth globally, as reported by the Financial Times on Tuesday, with more than 4,000 employees across the US, Latin America, the UK and the Middle East. Medium.
CloudKitchens buys or leases warehouse space, converting the premises into “dark kitchens” — units that can be rented by restaurant businesses to cook food to sell through delivery apps like DoorDash or Uber Eats .
Recently, CloudKitchens has also started using excess space in facilities to store convenience goods, such as pet food or over-the-counter medicine.
Microsoft’s involvement follows its roughly $100 million investment in Uber in 2015, when the ride-hailing service was valued at about $50 billion. But the software company’s decision to back Kalanick, whose exit from Uber in 2017 was prompted by a series of ethics scandals and management failures, appears to set Microsoft apart from other big Silicon Valley investors who backed him for the last time the entrepreneur.
Four former employees told the Financial Times that CloudKitchens suffered from many of the same cultural issues found at Uber and was experiencing a high rate of staff attrition as a result. One former senior figure, who also previously worked at Uber, described CloudKitchens as “the most toxic place I’ve ever seen or experienced.”
Another former employee said: “If they want to be a successful company, there has to be a very big culture change. People should be valued as people within the company.” CloudKitchens declined to comment on its culture.
The reason behind Microsoft’s interest in CloudKitchens, and the risk of associating with a figure as controversial as Kalanick, is not clear.
Microsoft’s investment could be part of a commercial deal involving its Azure cloud computing business, a common arrangement in the industry. Some dark kitchen operators use Microsoft technology, including video monitoring of food preparation and “internet of things” sensors, according to the software company’s marketing materials, though CloudKitchens is not mentioned among them.
Microsoft and CloudKitchens declined to comment on the investment. Initial details of the round’s existence were first reported by Business Insider.
Kalanick bought out existing investors in City Storage Systems, rebranding it as CloudKitchens and taking over as CEO in 2018. By the end of 2019 he had sold his entire stake in Uber, worth more than $2.5 billion, and was left the board of the company.
The windfall from Uber’s success allowed Kalanick to largely self-fund his fledgling culinary empire in the early years. In 2019, it attracted an additional $400 million in funding from Saudi Arabia’s sovereign wealth fund, which had also been an investor in Uber.
However, no other major Uber investor has disclosed any involvement in CloudKitchens. In 2017, some of Uber’s biggest investors, including Silicon Valley venture capital firms Benchmark, First Round Capital and Menlo Ventures, signed a letter demanding Kalanick’s ouster as CEO.
Since his departure from Uber, Kalanick has struggled to keep his latest venture out of the media spotlight. Unlike most startups, he hasn’t announced any big investments and even asks staff to keep CloudKitchens off their LinkedIn profiles.
As well as Microsoft, investment management group King Street Capital was involved in CloudKitchens’ November funding, two people with knowledge of the round said. King Street declined to comment. The round coincided with the hiring of former Amazon executive John Curran as CFO.
