Grocery delivery startup Instacart cuts internal valuation to $10 billion from $39 billion a year ago as it prepares for 2023 IPO

Grocery delivery startup Instacart cuts internal valuation to $10 billion from $39 billion a year ago as it prepares for 2023 IPO

Time Stamp: December 28, 2022 11:17 AM
Source Node: 1850499

In October, Grocery delivery startup Instacart postponed its much-anticipated IPO as stock market volatility, soaring inflation, and interest rates left investors worried about growing volatility in capital markets. The company had planned to go public this year but decided to shelve its plan due to market uncertainty. Now, the IPO appears to be back on track.

Instacart has cut its internal valuation to $10 billion as it prepares to go public next year, according to a report from The Information on Tuesday, citing two people familiar with the matter. The new valuation, which is 20% lower than the one it had in October, gives a sense of the price the San Francisco-based startup could fetch when it sells shares to the public.

The $10 billion valuation is also about 75% lower than the price investors paid for shares early last year when its paper valuation was $39 billion.

Instacart is not alone. The tech IPO market is facing its worst drought in nearly 20 years amid global economic uncertainty, wars, and looming recession in Europe and the United States. So far this year, only 14 tech companies have floated their shares on stock exchanges so far this year, according to data from research firm Refinitiv.

According to the report, Instacart has spent much of this year meeting with over 50 potential investors ahead of a highly anticipated initial public offering. In March 2021, Instacart doubled its valuation to $39 billion after raising $265 million in funding. It was the second time Instacart doubled its valuation since the start of the pandemic in February 2020, making the on-demand grocery delivery startup the second-largest U.S.-based unicorn, behind SpaceX, Elon Musk’s space startup which was valued at $74 billion at the time.

Fast forward a year later, Instacart, which has raised over $2.5 billion from investors including Andreessen Horowitz and Sequoia Capital, slashed its valuation by almost 40% to about $24 billion to reflect the selloff in technology stocks this year.

Founded in 2012 by Apoorva Mehta (a former Amazon employee), Brandon Leonardo, and Max Mullen, the San Francisco, California-based Instacart is a grocery startup that offers same-day grocery delivery service. Instacart has quickly scaled to over 220 markets and partnered with retailers across North America, including popular national chains (Albertsons, Kroger, Costco, Loblaw) as well as local, regional grocers (Publix, Wegmans, Schnucks, H-E-B).

Instacart is available to more than 85% of U.S. households and more than 70% of Canadian households with delivery and pickup services across more than 5,500 cities in North America. The company expects to deploy the new capital in a number of ways, including product development focused on introducing new features and tools to enhance the customer experience, continued investment in Instacart Enterprise to support retailers’ end-to-end eCommerce needs, and further investment in Instacart Ads to help connect Consumer Packaged Goods (CPG) brands of all sizes to customers shopping online from their favorite local retailers.

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