Instacart reaches $39 billion valuation with new funding round

E-grocery platform Instacart has upped its valuation to $39 billion with the addition of $265 million from a new round of financing.

The latest funding was led by current investors, including Andreessen Horowitz, Sequoia Capital, D1 Capital Partners, Fidelity Management & Research Co. and T. Rowe Price Associates Inc., San Francisco-based Instacart said Tuesday.

Instacart’s most recently announced financing came in October, when the company landed $200 million as part of a round led by current investors Valiant Peregrine Fund and D1 Capital Partners. At the time, the funding lifted Instacart’s valuation to $17.7 billion.

“Today’s fundraising reflects the strength of Instacart’s business, the growth our teams have delivered and the incredible opportunity ahead,” Nick Giovanni, chief financial officer at Instacart, said in a statement on Tuesday. “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.”

Related:Instacart taps Facebook exec, former Spotify and Netflix CFO for board

"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." — Nick Giovanni, Instacart

Instacart has earmarked the new capital for workforce expansion, including raising the corporate headcount by 50% in 2021, and investment in various operations, including Instacart Marketplace, which connects customers and retailers; Instacart Advertising, which enables consumer packaged goods companies to reach online shoppers; and Instacart Enterprise, which provides retailers with end-to-end e-commerce solutions.

“We were impressed with Instacart’s ability to meet surging demand in 2020 and are excited to further invest,” commented Dan Sundheim, founder of D1 Capital Partners. “We remain bullish about the future of the online grocery space and believe the opportunity in front of Instacart is significant, particularly as the company scales its Instacart Advertising and Instacart Enterprise offerings to help serve its grocery partners.”

In 2020, Instacart added more than 200 new retailers and over 15,000 new store locations to the Instacart Marketplace. The company also expanded its same-day delivery and pickup services to new retail segments, including prescriptions and over-the-counter medicines, office supplies, electronics, health and beauty care, home decor and sporting goods.

Related:Walgreens goes national with Instacart delivery

Last week, Instacart announced a national rollout of same-day delivery with drug chain Walgreens, following chainwide launches with Family Dollar and Meijer.

“Instacart has clearly proved its value for millions of customers, thousands of shoppers, and hundreds of retailers,” stated Andrew Davis, director of private investments at T. Rowe Price. “We are pleased to continue to invest in Instacart to scale its growth plans and bring more benefits to the grocery e-commerce ecosystem.”

The new funding comes to Instacart amid industry speculation about an impending initial public offering. In November, Reuters reported that Instacart has enlisted investment bank Goldman Sachs to lead the IPO, which could be launched in 2021. Then in January, Instacart hired Goldman Sachs veteran Giovanni, a specialist in IPOs and mergers/acquisitions, to succeed Sagar Sanghvi as CFO. And in February, Facebook executive Asha Sharma started at Instacart as chief operating officer, and Fidji Simo, head of Facebook App, and Barry McCarthy, former CFO for Spotify and Netflix, joined Instacart’s board of directors, bringing more digital business acumen to the company.

“Sequoia has been a consistent investor in Instacart since 2013, when we formed our original partnership and the online grocery market was still in its infancy,” Michael Moritz, partner at Sequoia Capital, said in a statement. “Now, eight years later, Instacart, which has delivered groceries and goods for millions of customers across North America, is the category leader and fulfilling its role as a vital service for consumers, a reliable partner for retailers and an effective platform for advertisers.”

Currently, Instacart partners with almost 600 national, regional and local retailers in North America and provides delivery and pickup services from more than 45,000 stores to over 85% of U.S. households and 70% of Canadian households.

“The Instacart team unlocked one of the most operationally complex industries and brought it online to the benefit of the entire grocery ecosystem. As a longtime investor, we’ve been incredibly impressed by the team’s resilience and how they met the moment of 2020,” commented Jeff Jordan, managing partner at Andreessen Horowitz. “We believe this is just the beginning for online grocery and Instacart is well-positioned to continue to lead in this emerging space.”