Instacart, a grocery-delivery startup, just announced a $US220 million Series C round led by Kleiner Perkins at a valuation of $US2 billion.
That’s a pretty big valuation leap from June, when the company raised $US44 million at a valuation of $US400 million. The company has raised $US275 million total.
Instacart, which launched less than three years ago, currently has its more than 4,000 shoppers deliver groceries in about an hour to people in 15 different cities, with a delivery fee of $US5.99 for one-hour delivery and $US3.99 for two-hour delivery. Founder and CEO Apoorva Mehta said the company plans to use the new funding for continued geographic growth, technology enhancements, and category expansion.
Instacart is just one of several startups trying to tackle the speedy-delivery space, including New York-based WunWun, which delivers small orders of groceries and other goods without a delivery fee in under an hour and Postmates, which does the same, but with a $US5 delivery fee. It also competes with FreshDirect which delivers groceries to the Northeast with a delivery fee of up to $US7.99 for next-day service.
Big players like Google, with Shopping Express, and Amazon, with AmazonFresh, are also experimenting with same-day grocery delivery. Both can bring customers their goods same-day, but with longer delivery windows than Instacart’s, Postmates’, or WunWun’s.
One of the complaints about Instacart is that, because the company doesn’t stock inventory and can’t track the inventory from the stores it partners with, you can end up spending a bunch of time on the phone with your Instacart shopper, trying to figure out alternatives for what was originally on your shopping list. FreshDirect, on the other hand, does stock inventory, so you’ll always get exactly what you ordered.
Instacart also marks up the prices of groceries: that’s how it makes money. Sources familiar with Instacart’s finances told The Wall Street Journal, however, that Instacart isn’t profitable and that not all orders make even a small profit. The company pays its shoppers, who use their own cars, a minimum $US10 per delivery, with more for large orders for faster speeds.
This fundraise was reported by TechCrunch at the beginning of December 2014.