Instacart lands $225 million in new funding

Instacart said it has raised $225 million in new financing amid an “unprecedented surge” in consumer demand for online grocery delivery and pickup services since the COVID-19 outbreak.

Led by DST Global and General Catalyst, along with the participation of existing investor D1 Capital Partners, the investment hoisted Instacart’s valuation to $13.7 billion, the San Francisco-based e-grocery specialist said Thursday.

“We have ambitious plans for the future, and this new investment enables us to deepen our support for our shoppers and partners, further fund strategic initiatives such as our advertising and enterprise businesses, and continue to deliver exceptional experiences for customers,” Instacart founder and CEO Apoorva Mehta said in a statement.

Most recently, Instacart has been investing in the expansion and support of its base of personal shoppers, which has grown by leaps and bounds during the coronavirus pandemic.

Before the COVID-19 crisis, Instacart had about 130,000 full-service shoppers and 12,000 in-store shoppers to fulfill online grocery orders for same-day delivery or pickup. In late April, Instacart said it aims to hire 250,000 more full-service personal shoppers over the coming months to help meet skyrocketing demand for grocery delivery. A month earlier, the company announced plans to hire 300,000 new full-service shoppers and met that goal just weeks later, which expanded its shopper community to more than 500,000 people. At the time, Instacart reported that order volume had jumped more than 500% year over year, with the average customer basket size growing 35%.

Related:Instacart adds Big Lots to retail partner base

Since the coronavirus crisis began, Instacart's order volume has jumped more than 500% year over year, with the average customer basket size growing 35%.

On the support side, Instacart in April announced plans to distribute free health and safety kits to full-service personal shoppers, which was followed in May by the launch of an in-app “safety hub” of emergency services and resources for shoppers through a partnership with security firm ADT. The company also introduced “Leave at My Door” delivery, providing a contactless option for personal shoppers and customers.

“COVID-19 created a massive shift for the grocery industry and forever changed how people view the necessity of on-demand services. Overnight, Instacart became an essential service for millions of families across North America, and our teams have worked incredibly hard to safely serve customers and shoppers during this time of need,” Mehta explained.

“This pandemic has fundamentally reshaped the way people think about grocery and e-commerce,” he noted, “and we’re proud to have Instacart continue to play an important role in people’s lives now and long after this crisis subsides.”

Related:C&S Wholesale, Instacart team up to bring online grocery to 3,000 independents

Since its founding in 2012, Instacart has raised approximately $2.1 billion in funding. Its most recent rounds of financing came in 2018, including $350 million that April (lifting the company valuation to $4.35 billion), $600 million in October (valuation $7.6 billion) and $271 million in November (valuation $7.87 billion).

“That Instacart was able to meet an unprecedented increase in consumer need over the past several challenging months is just one of many signals of the company's operational excellence,” according to Kyle Doherty, managing director at the General Catalyst Endurance fund. “We’ve been following this team since the beginning and, today, we’re proud to partner with Instacart as they continue to build the service — with its ease of use, selection and affordability — to make online grocery accessible for millions of people across North America.”

Instacart said it expects to funnel the new capital into further expansion of its shopper community, including new services and features; key businesses such as Instacart Advertising and Instacart Enterprise; and continued scaling of its operational and technical teams to help meet rising demand for delivery and pickup. 

“It’s been remarkable to watch the Instacart team, in these unprecedented times, not only successfully scale its operations and technology to serve customers, but also provide earning opportunities for hundreds of thousands of shoppers, as well as continued business for its retail partners,” stated Saurabh Gupta, managing partner at DST Global. “We are excited to partner with Apoorva and the Instacart team as they deliver long-term value for customers, shoppers, retailers and advertisers for years to come.” 

Currently, Instacart now partners with more than 400 national, regional and local retailers across more than 30,000 stores in the United States and Canada. More than 85% of U.S. households and over 70% of Canadian households have access to its delivery and/or pickup services.

The company also has expanded its roster of retailer partners outside traditional grocers — including Big Lots, Rite Aid and Staples Canada — and branched into new categories such as alcohol delivery and, recently, prescription delivery with Costco Wholesale. A partnership announced last week with C&S Wholesale Grocers also stands to bring Instacart services to thousands of independent supermarkets.

“Instacart’s response to COVID-19 — refocusing the company to meet the rapid shift in needs of customers, shoppers and retailers — has strengthened our conviction in its capacity to lead this important industry in partnership with brick and mortar retailers,” commented Dan Sundheim, founder of D1 Capital Partners. “We continue to believe that consumer adoption of online grocery will grow substantially in the coming years and are proud to deepen our investment in Instacart at this time.”

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