WSJ News Exclusive | Marc Lore’s Food-Delivery Startup Wonder Is Valued at $3.5 Billion After Capital Raise

The latest funding values the company at roughly $3.5 billion, according to people familiar with the matter. Previously it was valued at $1.4 billion, the people said.

The investment and valuation come at a time when funding for startups is drying up, a swift reversal from recent years when tech enthusiasm, low interest rates and other factors helped nudge investors further into betting on companies without near-term plans to earn a profit. Wonder has plenty of financing to grow, said Mr. Lore, but “six months ago, we would have raised at a higher valuation. Everyone would.”

Mr. Lore, the 51-year-old majority owner of Wonder, has earned investors considerable profits through sales of startups. He sold Quidsi Inc., an e-commerce site for diapers and other household goods, to

Amazon.com Inc.

in 2010 for $500 million. Jet.com, another internet venture that he founded, was sold to

Walmart Inc.

for $3.3 billion in 2016. In 2020, Walmart ended Jetblack, a personal-shopping service aimed at high-end urban shoppers, and wound down Jet, folding the operation into its broader e-commerce business.

Wonder’s roster of investors includes entities that have provided capital for Mr. Lore’s past ventures, including Bain Capital Ventures—which led Wonder’s recent funding round—as well as GV, Accel, New Enterprise Associates, General Catalyst and Forerunner Ventures.

Wonder aims to build a network of truck-based restaurants that can cook hot curbside meals drawn from chef-driven menus. That model also allows Wonder to deliver food to homes, which would benefit customers and profit, said Mr. Lore.

The service is available in a cluster of New Jersey suburbs, covering 132,000 households, that are located west of New York City. Wonder aims to expand to a second part of New Jersey later this year, then eventually to regions across the U.S. by 2035. The company declined to provide financial figures.

Wonder also wants to add other prepared-food businesses to its cooking and delivery network. In the areas where the company has operated the longest, about 25% of Wonder’s revenue comes from Envoy, a crowd-sourced food-delivery service where people can order food from local restaurants inside the Wonder app. Wonder started that service to avoid alienating local restaurants and offer more food choices, said executives.

In the future, the company aims to deliver ready-to-heat meals and meal-preparation kits to customers.

“We want to be a super app for food,” Mr. Lore said. The company aims to have a national footprint by 2035, he said.

Food-delivery and meal-kit businesses have been able to attract more customers through the Covid-19 pandemic but have faced sharper pressure on their bottom lines as a result of higher operating costs, including payments to restaurant partners, staff and drivers. Investors are worried about the fate of pandemic-fueled businesses:

Uber Technologies Inc.

shares are down more than 48% this year, and

Blue Apron Holdings Inc.

shares are down more than 64%.

Wonder was started in 2018, while Mr. Lore was leading Walmart’s U.S. e-commerce operations. At that time, he served as an investor and adviser. His younger brother,

Chad Lore,

was Wonder’s chief executive.

Soon, several executives from Mr. Lore’s previous startups joined the firm.

Scott Hilton,

who has worked with Mr. Lore at companies for 15 years, joined Wonder months after he left Walmart in 2019, eventually becoming CEO.

Early last year, Mr. Lore left Walmart and planned to start a number of new ventures.

He invested in several companies, including Archer, an electric flying-vehicle startup, and made plans to build a 200,000-acre city of the future. Last year, he bought the Minnesota Timberwolves and Lynx professional basketball teams in partnership with former Major League Baseball star Alex Rodriguez. Mr. Lore, a former college sprinter and U.S. national bobsledding-team member, later decided to take basketball lessons to teach himself a game he had never played.

But as Mr. Lore sought significant funding for Wonder, some potential investors questioned his focus on the food startup, according to people familiar with the matter. Last December, Mr. Lore stepped into the role of CEO and board chairman of Wonder Group.

Mr. Lore said steering Wonder is his primary focus and has stepped back from active involvement in some of his other investments.

So far at Wonder, hundreds of millions of dollars has been spent figuring out how to re-engineer high-quality restaurant meals such as seared steak in a small kitchen with limited gear, as well as how to speed up cooking.

Having made progress on the recipes, executives said they have turned their attention to speeding up the cooking process in a bid to make the venture profitable. Wonder has taken steps such as redesigning the kitchen layout and using software that helps chefs identify the most efficient way to prepare a meal.

Corrections & Amplifications
Wonder has raised $900 million from investors since the company’s founding. A previous version of this article incorrectly said Wonder has raised $900 million over the past year. (Corrected on June 14)

Write to Sarah Nassauer at sarah.nassauer@wsj.com