Instacart IPO: What do we know about the Instacart IPO?
The Instacart IPO is expected in September 2023, recent reports have the date estimated at September 19. Although the listing is still likely to be one of the largest of the year, the grocery-delivery business is now only valued at $9.3 billion, less than a quarter of what it's worth when it intended to list the first time around.
The company filed its S-1 with the Securities and Exchange Commission (SEC) on Friday 25 August, marking the first clear step toward the IPO. The filing revealed that beverage and snack giant PepsiCo pledged to invest $175 million into the company's Series A preferred stock. Norges Bank Investment Management and venture capital firms TCV, Sequoia Capital, D1 Capital Partners and Valiant Capital Management have agreed to participate as cornerstone investors.
The company had originally filed with the SEC on May 11 2021 to go public but the listing was continuously delayed due to market volatility.
How much is Instacart worth?
Instacart is worth around $10 billion according to its internal valuation in December 2022, that's down from $24 billion in May 2022, and a massive departure from its $39 billion valuation during the pandemic.
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.
Instacart's S-1 revealed that as of 2023, it's the technology partner to more than 1400 retailers across 85% of the US grocery market - including big brands such as Kroger, Costco and Albertsons.
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.
In its S-1 filing, Instacart revealed it had processed 263 million orders totalling $29.4 billion in gross transaction value (GTV) in 2022. This marks an annual increase of 80% between 2018 and 2022.
Instacart also makes money through advertising revenue, where brands can advertise products to the monthly active users. Ad revenue hit $740 million in 2022, which was an increase of 29% year on year. The revenue stream makes up 29% of the company's total revenue.
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?
Yes, according to the figures posted in Instacart's S-1 filing ahead of its IPO, the company delivered a net income of $428 million in 2022 - compared to a loss of $74 million in 2021. This came off the back of a 39% increase in revenue for the year, generating $2.55 billion.
The filing noted that the first and second quarters of this year were Instacart's fourth and firth consecutive profitable quarters.
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