Grocery delivery service Instacart announced today that it has raised a $225 million as part of a new funding round. DST Global and General Catalyst led the round with participation from existing investor D1 Capital Partners. This brings the total amount of funding raised by the company to $2.1 billion (with a b), and the company says it’s new funding brings its valuation to $13.7 billion.
Instacart’s new funding comes during a time of record-setting online grocery shopping spurred on by the COVID-19 pandemic and subsequent sheltering in place orders.
Instacart has had to make all sorts of sudden changes to its business on the fly as it tries to scale and keep up with demand for its delivery service. The company is bolstering the ranks of its gig shoppers to 750,000 and added new features like order ahead to try and ease congestion.
But it hasn’t all be smooth sailing. Instacart has been criticized over the treatment of its gig workers both during this pandemic and before. Instacart Shoppers have actually gone on strike multiple times to protest their working condition. As TechCrunch reports, the company has also spent $10 million to try and keep its Shoppers classified as contractors rather than as employees, which would cost the company more. TechCrunch also points out criticism Instacart has received over its public response to social injustice and the Black Lives Matter movement, which spoke in vague terms about supporting internal teams.
The larger, more existential question for Instacart right now is how much of this surge in online grocery shopping is permanent? The U.S. is just now starting to emerge from quarantine and there is some indication that people still prefer to shop for their groceries in person at the store. As a consequence, will Instacart be able to live up to its valuation hype once this pandemic recedes? There are now 225 million new reasons to find out.
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