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Instacart’s insane valuation growth

$265M funding round more than doubles company’s valuation from last October

Instacart has announced a new funding round of $265 million, increasing its valuation to $39 billion. (Photo: Instacart)

Instacart has announced a $265 million venture fundraising round, putting the total value of the company at $39 billion — more than double what it was just six months ago.

The round involved existing investors Andreessen Horowitz, Sequoia Capital, D1 Capital Partners, Fidelity Management & Research Co. LLC, and T. Rowe Price Associates Inc.

“Today’s fundraising reflects the strength of Instacart’s business, the growth our teams have delivered, as well as the incredible opportunity ahead. This past year ushered in a new normal for millions of people and changed the way we shop for groceries and goods,” the company wrote in a blog post.

Instacart has now completed 17 rounds of funding, according to Crunchbase, with a total of $2.65 billion raised. It completed three fundraising rounds in 2020, including a $200 million round in October, $100 million private equity round funded solely by T. Rowe Price in July, and a $225 million round in June.

It has also had rounds of $600 million, $150 million and $200 million in 2018, and a $400 million round in 2017.

Instacart, which more than doubled its workforce in 2020 to over 500,000, was valued at $17.7 billion in October when it closed its most recent round. Prior to the pandemic, its valuation was $2.5 billion.

Instacart said it would use the new funding in part to expand corporate headcount by 50% in the first half of 2021 as well as to invest in Instacart Marketplace, Instacart Advertising and Instacart Enterprise.

Marketplace connects customers and retailers while Advertising offers the ability for consumer packaged goods to reach online customers. Enterprise is an end-to-end e-commerce solution for retailers.

“Today’s fundraising reflects the strength of Instacart’s business, the growth our teams have delivered and the incredible opportunity ahead,” said CFO Nick Giovanni. “This past year ushered in a new normal, changing the way people shop for groceries and goods. While grocery is the world’s largest retail category with annual spend of $1.3 trillion in North America alone, it’s still in the early stages of its digital transformation. As online grocery penetration increases over the coming years, we’ll continue to invest in our people, products and partners to support all of the communities we serve.”

Despite grocery’s huge retail footprint, online grocery is still in its early stages. Research firm Mercatus predicts e-commerce grocery will grow to 21.5% of total U.S. grocery sales by 2025. It was about 10% in 2020, but that was up from 3.4% in 2019.

Instacart said it has more than 600 national, regional and local retailers on its platform, representing more than 45,000 stores. It added more than 200 retailers with 15,000 stores in 2020 as shoppers shifted to online. A Mercatus survey, “eGrocery’s New Reality: The Pandemic’s Lasting Impact on U.S. Grocery Shopping Behavior,” found that during the pandemic, 30% of shoppers changed their preferred shopping destination, and of those, 40% shifted to online shopping options. 

Instacart also expanded its product categories to include prescriptions, office supplies, electronics, health, beauty and wellness, home decor, and sports equipment.

In January, Instacart acknowledged layoffs of approximately 1,800 employees as it has begun shifting some grocery partners to a “Partner Pick” business model. Instacart has more than 500,000 workers, adding nearly 250,000 following the onset of COVID-19 as demand for its services increased 500%.

Citing the growth of curbside pickup at grocers nationwide, Instacart said it is responding to offer its store partners more flexible options, Partner Pick is one of those.

“Instacart has been engaging in discussions with its retail partners about various options designed to support their changing needs as grocery e-commerce becomes even more integral to their businesses,” Joseph E. Santucci Jr., partner at law firm Stinson, wrote on behalf of the company to the United Food and Commercial Workers International Union (UFCW), which represents 10 in-store shoppers (ISSs) at Mariano’s in Skokie, Illinois, to advise them that their jobs were being eliminated. The noted that ISSs are “significantly more expensive on a cost-per-delivery basis than using a pure [full-service shopper] model.”

Instacart said it has rolled out Instacart Pickup curbside service at more than 3,300 stores nationwide in 30 states, including at ALDI, Food Lion, Publix, Sprouts and Wegmans. The company envisions a flexible retailer option that offers the ability to engage consumers with either Partner Pick or In-Store Shopper pick.

“Through Partner Pick, retail employees will utilize Instacart’s new pickup technology built specifically for each retailer to enable them to fulfill Instacart Pickup orders for customers,” Instacart wrote in a Medium post.

Click for more Modern Shipper articles by Brian Straight.

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Brian Straight

Brian Straight leads FreightWaves' Modern Shipper brand as Managing Editor. A journalism graduate of the University of Rhode Island, he has covered everything from a presidential election, to professional sports and Little League baseball, and for more than 10 years has covered trucking and logistics. Before joining FreightWaves, he was previously responsible for the editorial quality and production of Fleet Owner magazine and Brian lives in Connecticut with his wife and two kids and spends his time coaching his son’s baseball team, golfing with his daughter, and pursuing his never-ending quest to become a professional bowler. You can reach him at [email protected].