Previous investor Sequoia Capital led the funding round, which reportedly values the company at $3.4 billion, representing a big jump from the company’s 2014 valuation of $2 billion. Other investors in the Series D round include Andreessen Horowitz, Y Combinator Continuity, Kleiner Perkins Caufield & Byers, Wellcome Trust, FundersClub, Khosla Ventures, Initialized Capital, Thrive Capital and Valiant Capital.
Instacart, which expanded from 18 to 35 markets in the past year — the company will double its footprint this year — is still working toward profitability as it faces a crowded marketplace that includes retail giant Amazon.com and its AmazonFresh grocery delivery service and rapid delivery Prime Now program.
Instacart is closer to Prime Now than AmazonFresh, which operates its own grocery distribution facilities. Both Instacart and Prime Now send people to hand-pick grocery items at established stores. But Instacart has access to more stores, including Whole Foods, Costco, Safeway, QFC, Uwajimaya, Petco, PCC, Central Co-op and others in the Seattle area. Its retailer roster now includes more than 135 partners; Instacart also has deals with more than 160 CPG partners.
Instacart, Amazon, and others have been tinkering with pricing, trying to figure out the best way to get the most people access to their services. Last year, Amazon dropped its $299 annual fee for AmazonFresh in favor of a $14.99 monthly subscription for Prime members only.
Instacart makes money through delivery fees and marking up prices of some in-store items. Delivery fees vary by size of order, and The Wall Street Journal reports that the company is pushing customers toward a flat $14.99 monthly fee, or an annual $149 cost, for unlimited grocery deliveries.
Founded in 2012 by former Amazon employee Apoorva Mehta, San Francisco-based Instacart operates in 25 states. It delivers groceries to much of the Seattle area, as far north as Everett and Mukilteo. The company has raised more than $660 million to date.
Instacart utilizes a similar business model to that of Webvan, a company that lost investors hundreds of millions of dollars in perhaps the biggest bomb of the dot-com bust. But Sequoia executives, who also invested in Webvan, have said that technological advances and a more creative business model helped Instacart crack the same-day delivery code in a way that is good for both customers and the business.
Amazon, meanwhile, is also preparing to open physical grocery stores.