Instacart IPO: Everything you need to know about Instacart

Grocery delivery service Instacart has exploded in popularity since its 2012 launch, capturing more than half of the US online grocery market. Here’s an overview of the business ahead of the Instacart IPO.

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Instacart IPO: What do we know about the Instacart IPO?

The Instacart IPO is expected to take place at some point in 2022, with the company having filed with the SEC on May 11 to go public. The post-IPO valuation of the company could be in excess of $24 billion, a significant drop from the $39 billion price tag in 2021 when Covid restrictions boosted doorstep deliveries.

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How much is Instacart worth?

Instacart is worth some $24 billion as of May 2022, having cut its valuation from the 2021 mark of $39 billion when the home delivery trade was booming during the Covid pandemic. In total, the company has raised well over $2 billion across more than 14 rounds of venture capital funding. Its valuation has grown from $3.4 billion in 2017, to $7.6 billion in 2018, to $17.7 billion in October 2020 before the $39 billion valuation in March 2021.

What is Instacart?

Instacart is a US-based grocery delivery and pick-up company, enabling customers to order from participating retailers through its website and mobile app, and receive their goods via personal shoppers.

Founded in 2012 by serial entrepreneur and former Amazon employee Apoorva Mehta, the company began via an app. It was funded initially by a Y Combinator accelerator, through which it raised $120,000. Using Mehta’s network of Silicon Valley contacts, the company grew by positioning itself as a speedier grocery delivery choice than rivals who also offered same-day deliveries.

Funding rounds of $2.3 million and $8.5 million followed, helping Instacart develop a presence in some 20 cities within two years of starting up and signing deals with giants such as Whole Foods and PepsiCo.

The company’s 2021 revenues were around $1.8 billion, an increase of $0.3 billion year on year.  

Who are Instacart’s competitors?

Instacart’s competitors can be said to encompass operators using the same model of delivering via third party grocers, such as Shipt, but also providers that deliver from source such as FreshDirect.

Additionally, there are mealkit providers supplying pre-measured ingredients, such as Blue Apron, and restaurant services such as Postmates that, while offering slightly different services, could see some overlap in terms of customer intent.

How does Instacart make money?

Instacart makes money through delivery fees charged on each of its grocery and pick-up orders. For transactions above $35, $5.99 is charged, while orders above $35 cost $7.99 for delivery, with a minimum order of $10. Fees may increase for customers who want quicker delivery or busier timeslots. Instacart also provides space for brands to advertise on the platform.

Additionally, customers have the option of subscribing to an annual membership of $99 or a monthly service of $9.99. This gives them an array of benefits including waived delivery fees in certain conditions, reduced service fees, and a more accommodating price structure during busy hours.

What is Instacart’s business strategy?

Instacart’s strategy from the beginning was rooted in facilitating the online grocery ordering process to enable consumers to benefit from doorstep delivery of their shopping, as well as helping smaller grocers to succeed online.

In 2016, a partnership with Whole Foods afforded Instacart exclusive delivery of the grocer’s goods. This didn’t last long, as Amazon’s subsequent purchase of Whole Foods squashed the Instacart-Whole Foods relationship. But as supermarkets became concerned that Amazon would undercut their prices, many decided to partner with Instacart. Instead of the severed ties with Whole Foods proving to be a negative, 200 retail partners soon became 350 for the online operator.  

The scale of the operational challenge during the coronavirus outbreak would become apparent. The company saw a 500% jump in order volume as anxious shoppers looked to avoid shopping in public spaces.

Following the rush of business seen during that period, Instacart has sought to expand into new geographical markets and has launched new products to tempt consumers into the world of e-commerce. The care team has grown, the number of consumer packaged goods partners increased, and the range of products bolstered, now catering for alcohol and prescription delivery as well as beauty and general merchandise.

Is Instacart profitable?

Although Instacart does not publish net profits, according to a leaked document it recorded its first profitable month in April 2020, after reportedly suffering $25 million in losses every month. The profitability status of the company since 2020 is unclear, but the fundraise of $265 million completed in March 2021 (see below) may have gone some way to cover any losses the company experienced from that point.

Who owns Instacart?

Instacart is owned by a range of individuals and private institutions, from founder Apoorva Mehta to investment giants such as T. Rowe Price and Sequoia Capital. 

Who are the directors of Instacart?

Apoorva Mehta - CEO/founder

Brandon Leonardo - Co-founder

Max Mullen - Co-founder

Sagar Sanghvi - Chief Financial Officer

Chris Rogers - Vice President, Retail

Jakii Chu - Chief Marketing Officer

 

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