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Grocery delivery startup Instacart raises $400 mln
March 8, 2017 / 6:25 PM / 9 months ago

Grocery delivery startup Instacart raises $400 mln

SAN FRANCISCO, March 8 (Reuters) - Grocery delivery service Instacart has raised $400 million in its latest financing round, the startup announced on Wednesday, as investors have started to show more enthusiasm for a business model whose viability has long been in question.

San Francisco-based Instacart strikes deals with Whole Foods, Costco, Safeway and more than 130 other markets to deliver groceries to consumers. Customers can order groceries from those stores through the Instacart app, and an Instacart driver delivers the food in as little as an hour.

Instacart bears a striking resemblance to Webvan, the well-known Silicon Valley grocery delivery service that went bust in the dot-com era. For that reason, Instacart has been under intense scrutiny since its launch in 2012.

But Instacart has found more ways to make money than on just delivery fees, a famously difficult model. It earns revenue from coupon sales and promotions sponsored by brands such as Nestle, General Mills, Coca-Cola, which are displayed in the app. The company also has a subscription service, similar to Amazon Prime.

The most recent financing round is the company’s largest to date and was led my Sequoia Capital, Instacart’s earliest venture capital investor and also a backer of the defunct Webvan. Instacart has to date raised more than $600 million from investors including Andreessen Horowitz, Whole Foods, Khosla Ventures and Kleiner Perkins Caufield and Byers.

The company says it operates in 35 markets and plans to double its footprint this year. (Reporting by Heather Somerville; Editing by David Gregorio)

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