Instacart is finally gearing up for an initial public offering later this year, around 15 months after the grocery delivery service filed confidentially to do so.
Most major IPOs have been placed on hold for nearly two years, including Instacart's, but the market is showing signs of a thaw.
Restaurant chain Cava Group debuted in June, and U.K.-based Arm Holdings is expected to have the biggest U.S.-based IPO of the past two years. Arm filed on Monday to go public on the Nasdaq exchange, most likely in September. San Francisco-based Instacart is also expected to IPO next month, and its debut will also be closely watched by investors and other U.S. tech companies.
“While Instacart’s revenues aren’t enormous ($2.55 billion in 2022, and around $3 billion annualized in 2023), it's growing fast, and is generating a profit. This is in contrast to many unicorns that have filed in recent years, and is in line with what is expected from public investors in the current market," PitchBook's lead VC analyst Kyle Standord said in a statement. "Core metrics are growing steadily, with transaction revenues growing jumping 34% through the first six months of the year. Instacart has set itself up as an intriguing IPO, and will be more comparable for other VC-backed companies than other listings in 2023.”
Globally, the market for online grocery services is expected to grow by more than 25% annually through 2030, when it's expected to reach more than $2 trillion, according to a report from Grand View Research.
North America represented 15% of the global online grocery market in 2021, according to Grand View Research, and Instacart competes with other major players including Walmart, Amazon, Target and Kroger.
Instacart filed confidentially for an IPO in May 2022. A couple of months earlier, the company had slashed its internal valuation by nearly 40% to $24 billion, down from $39 billion. It slashed its valuation several more times, dropping as low as $10 billion before ticking back up slightly to $12 billion this past April.
Since going through Y Combinator's accelerator in 2012, its investors have included T. Rowe Price, D1 Capital Partners, Tiger Global Management, Coatue Management, Initialized Capital Management, Whole Foods Market, Comcast Ventures, Dragoneer Investment Group, Kleiner Perkins, Thrive Capital, Unilever Ventures, American Express Ventures, Andreessen Horowitz, Sam Altman, Garry Tan, Khosla Ventures Sequoia Capital, SV Angel, Start Fund and Y Combinator.
The company was founded in 2012 by Apoorva Mehta, Brandon Leonardo and Max Mullen. Former Facebook executive Fidji Simo became Instacart's CEO in August 2021.
In July 2022, Mehta announced that he would step down from Instacart's board when the company IPOs.
Bay Area IPO Watch 2023/2024
Legally known as Maplebear Inc., Instacart will be listed on the Nasdaq under the ticker symbol CART. The company didn't disclose a price target for its shares or how much money it hopes to raise.
PepsiCo is buying $175 million-worth of shares in a private sale. Several other investors have already "indicated an interest" in purchasing up to $400 million-worth of Instacart's shares through the initial offering. Those investors include Norges Bank Investment Management, TCV, Sequoia Capital, D1 Capital Partners and Valiant Capital Management.
Instacart had partnerships with more than 1,400 retail brands representing more than 80,000 stores across the U.S. and Canada, as of June 30. The company also claims those retail partners reached around 85% of the U.S. grocery market in 2022.
Last year, Instacart generated more than $2.5 billion in revenue and clocked $428 million in net income. The company recorded net losses of in the previous two years. It lost $70 million on $1.48 billion of revenue in 2020, and lost $73 million on $1.83 billion of revenue in 2021.
Instacart has 7.7 million monthly active users, a.k.a. "monthly active orderers," who spend an average of $317 every month, and 5.1 million users have signed up for Instacart+, a membership program that offers benefits like free deliveries and reduced fees.
In June, Instacart had around 600,000 "shoppers" — they're the people who pick, pack and deliver orders, and a "vast majority" of them are independent contractors, or so-called gig workers.
More than 95% of households in the U.S. and Canada are located within Instacart's delivery and pickup zones.
