Instacart raises another $600M at a $7.6B valuation

Instacart chief executive officer Apoorva Mehta wants every household in the U.S. to use Instacart, a grocery delivery service that allows shoppers to order from more than 300 retailers, including Kroger, Costco, Walmart and Sam’s Club, using its mobile app.

Today, the company is taking a big leap toward that goal.

San Francisco-based Instacart has raised $600 million at a $7.6 billion valuation, just six months after it brought in a $150 million round and roughly eight months after a $200 million financing that valued the business at $4.2 billion.

D1 Capital Partners, a relatively new fund led by Daniel Sundheim, the former chief investment officer of Viking Global Investors, has led the round.

Instacart is raking in cash aggressively but spending it cautiously. The company still has all of its Series E, which ultimately totaled $350 million, and the majority of its $413 million Series D in the bank, a source close to the company told TechCrunch. That means, in total, Instacart has $1.2 billion at its fingertips. Currently, according to the same source, the company is only profitable on a contribution margin basis, meaning it’s earning a profit on each individual Instacart order.

In a conversation with TechCrunch, Mehta said the company didn’t need the capital and that it was an “opportunistic” round, i.e. the capital was readily available and Instacart has ambitious plans to scale, so why not fundraise. Instacart plans to use the enormous pool of capital to double its engineering team by 2019, which will include filling 300 open engineering roles in its recently announced Toronto office, he said.

As far as an initial public offering, it will happen — eventually.

“It will be on the horizon,” Mehta told TechCrunch.

“2018 has been a really big year for us,” he added. “The reason why we are so excited is because the opportunity ahead of us is enormous. The U.S. is a $1 trillion grocery market and less than 5 percent of that is bought online. It’s an enormous category that’s highly under-penetrated.”

In the last six months, Instacart has announced a few notable accomplishments.

As of August, the service has been available to 70 percent of U.S. households. That’s due to the expansion of existing partnerships and new deals entirely, like a recently announced pilot program between Instacart and Walmart Canada that gives Canadian Instacart users access to 17 different Walmart locations across Winnipeg and Toronto, Ontario.

The company has also completed several executive hires. Most recently, it tapped former Thumbtack chief technology officer Mark Schaaf as CTO. Before that, Instacart brought on David Hahn as chief product officer and Dani Dudeck as its first chief communications officer.

In early September, the company confirmed its chief growth officer Elliot Shmukler would be leaving the company.

The 6-year-old Y Combinator graduate has raised more than $1.6 billion in venture capital funding from Coatue Management, Thrive Capital, Canaan Partners, Andreessen Horowitz and several others.


Instacart’s chief growth officer Elliot Shmukler is leaving

Elliot Shmukler, who joined Instacart in 2016 to lead product, is leaving the company to pursue early-stage investments, TechCrunch has learned — and confirmed with the grocery delivery service. 

Shmukler was brought on as the company’s VP of product, but he’d recently transitioned into a new role, chief growth officer, before announcing his departure to staff. 

A spokesperson from Instacart told TechCrunch that Shmukler confirmed his plans a month ago and outlined his second act as a private investor. Instacart did not say whether Shmukler was joining an investment firm in an official capacity or if he planned to make angel investments.

Shmukler is still with the company today and will stick around to help with the transition. Instacart did not provide an official timeline of his departure. Moving forward, Shmukler’s employees will report to the company’s chief product officer David Hahn, who joined in May after serving as the VP of product at LinkedIn

At Instacart, Shmukler led the product management, design, marketing and catalog management teams. According to his LinkedIn profile, he helped expand the company’s subscription delivery program, called Instagram Express. He helped transform Instacart’s geographic expansion strategy, which resulted in the company making its service available to 70 percent of U.S. families as of August. And he spearheaded several of the brand’s key grocery partnerships, including with Kroger, Albertsons and ALBI.

Shmukler joined Instacart after three and a half years at Wealthfront, a financial planning startup where he was VP of product and growth. Before that, he held senior product roles at LinkedIn and eBay.

Led by founder and CEO Apoorva Mehta, Instacart is backed by Sequoia, Kleiner Perkins, Andreessen Horowitz and others. Having raised $350 million at a $4.3 billion valuation this year alone, an initial public offering is probably not in the cards just yet. For now, the company has to prepare for the long and hard battle ahead with the seemingly unstoppable duo that is Amazon and Whole Foods.