Instacart Now Valued at $39B

Marian Zboraj, Progressive Grocer
Instacart Now Valued at $39B
Instacart has raised $265 million as part of a new financing round.

Solidifying its domination in the online grocery market, Instacart has raised $265 million as part of a new financing round that increases its valuation to $39 billion  more than doubling its valuation of $17.7 billion from October 2020. 

The COVID-19 pandemic has accelerated consumer adoption of delivery and pickup grocery services, and this momentum shows no signs of slowing as consumers come to rely on the convenience of online shopping.

"Today's fundraising reflects the strength of Instacart's business, the growth our teams have delivered and the incredible opportunity ahead," said Nick Giovanni, CFO for Instacart. "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."

Instacart expects to deploy the new capital in a number of ways, including increasing its corporate headcount by 50% in 2021, as well as further investing in several key areas such as the Instacart Marketplace, which connects customers and retailers; Instacart Advertising, which enables consumer packaged goods companies of all sizes to reach customers shopping online; and Instacart Enterprise, which supports the entire grocery ecosystem by offering end-to-end e-commerce solutions for retailers.

The San Francisco-based company set its aggressive growth plans in motion in 2020 by adding more than 200 new retailers and more than 15,000 new store locations to the Instacart marketplace. It also expanded its same-day delivery and pickup offering across several new categories, including prescriptions and over-the-counter medications, office supplies, electronics, health, beauty and wellness, home decor, sports equipment, and more.

Most recently, Instacart expanded its on-demand delivery with Walgreens to residents across Illinois, with plans to roll out the service nationwide to nearly 8,000 stores over the coming weeks.

Instacart also recently struck a deal to acquire more than 250 patents from IBM. Financial terms weren't disclosed, nor did either company give details about the patents in question. 

Instacart's latest financing round was led by existing investors including Andreessen Horowitz, Sequoia Capital, D1 Capital Partners, Fidelity Management & Research Co. LLC, and T. Rowe Price Associates Inc.

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

"We were impressed with Instacart's ability to meet surging demand in 2020 and are excited to further invest," said Dan Sundheim, founder of New York-based 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."

As the largest grocery platform in North America, Instacart partners with more than 500 national, regional and local retailers, including unique brand names, to offer delivery and pickup services from more than 45,000 stores across more than 5,500 cities in North America. Instacart is available to 85% of U.S. households and 70% of Canadian households.

Deerfield, Illinois-based Walgreens is included in the Retail Pharmacy USA division of Walgreens Boots Alliance Inc. The drug store chain operates more than 9,000 retail locations across the United States, Puerto Rico and the U.S. Virgin Islands, serving about 8 million customers daily. Walgreens is No. 4 on The PG 100, Progressive Grocer’s 2020 list of the top food and consumables retailers in North America.

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