Online grocery shopping service Instacart announced today that it has raised another $200 million as part of a new financing round led by existing investors Valiant Peregrine Fund and D1 Capital Partners. This brings the total amount raised by Instacart to roughly $2.3 billion, and the company says its valuation now sits at $17.7 billion.
This new funding comes just months after Instacart raised $225 million back in June . But it also arrives at a time when COVID-19 has accelerated and normalized online grocery shopping. While grocery e-commerce has leveled off from its record highs earlier this summer, online grocery sales are expected to hit $250 billion by 2025.
Throughout the pandemic, Instacart has made numerous moves to keep up with demand for grocery e-commerce, including scaling its gig Shopper ranks (the people who do the actual picking and delivery) to 750,000 (not without some controversy, it should be noted).
But Instacart hasn’t just spent the past six months raising money and scaling its workforce. The company has partnered with Walmart to provide grocery delivery, expanded into the convenience category through a deal with 7-Eleven, and filed an intellectual property lawsuit against Uber’s Cornershop.
In a corporate blog post today announcing the funding, Instacart wrote:
We expect 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.
As noted, online grocery is on track to do big business over the next five years. However, even with its massive warchest, Instacart’s success isn’t guaranteed as there are a number of players both entrenched in and entering the grocery delivery space. Amazon is expanding its real world grocery store presence, Kroger is busy building out big automated delivery centers across the country, and both Uber and DoorDash are getting into grocery delivery.
This is all good news for consumers. As these big well-funded names duke it out, they will all be improving their infrastructure and systems to make delivery easier, faster and better.