Meet The Two Billion Dollar Delivery Company

31 Dec 2014 | Author: | No comments yet »

Grocery Delivery Service Instacart Raises $220M in New Funding.

Instacart, a San Francisco-based company that provides grocery delivery services, has raised nearly $210 million in a new round of funding according to documents filed with the Securities and Exchange Commission on Tuesday. The round, which could increase to $220 million if all allotted shares are sold, more than quadruples the startup’s previous valuation of $400 million, based on other filings uncovered by VC Experts, a private company research firm. The company dispatches workers to existing grocery stores like Safeway SWY, +0.13% and Whole Foods WFM, +1.16% to pick up customers’ orders and shuttle them to their doorsteps, often within an hour or two. But the internet has long promised to streamline home delivery in new ways, and Instacart is just one of many notable names working to, well, deliver on that promise. That is in contrast to grocery delivery from Amazon.com AMZN, -0.38% , Wal-Mart WMT, +0.39% and others which store their own groceries in warehouses for same-day delivery.

This round will bolster Instacart’s war chest as it faces growing competition from heavyweights like Google and Amazon, as well as from startups like Postmates and Wunwun. But the San Francisco-based startup has grown rapidly this year — 2014 revenue will be north of $100 million, or 10 times more than it was in 2013,” Recode reported, citing statistics from CEO Apoorva Mehta. Other investors include Sequoia Capital, Khosla Ventures, and Canaan Partners, along with Box CEO Aaron Levie, and Y Combinator president Sam Altman. Like Google GOOGL, -0.42% with its Express delivery service, Instacart avoids some of the operating costs of its rivals because it doesn’t have to refrigerate or store the goods it delivers. The startup currently delivers to Atlanta, Austin, Boston, Boulder, Chicago, Denver, Houston, Los Angeles, New York City, Philadelphia, Portland, the San Francisco Bay Area, San Jose, Seattle, and Washington D.C. — and it expects to be nationwide by the end of 2015 If you’re unfamiliar, Instacart works pretty much exactly how you’d expect a card-carrying grocery delivery startup to work.

The food delivery space is getting crowded, but that hasn’t stopped more startups from joining and more acquisitions from larger companies wanting their names in the space. You start by simply visiting the Instacart site from a computer or mobile device and then add items to your cart just like you would on any other ecommerce site. Investors want in, as proven by Instacart’s recent fundraising success, which means the battle to win out in this industry is getting bigger. “Instacart is also capitalizing on concerns among big grocery chains about Amazon expanding its grocery delivery business, and they are taking advantage of surging investor interest in the category.

After you’ve selected all the stuff you want, you then choose a delivery time, specify the location at which the groceries should be delivered, and check out with a credit card. Sequoia partner Michael Moritz, who was involved with his firm’s Webvan investment, sits on Instacart’s board and has long maintained that the businesses are different. The size of the raise signals that Instacart is intent on building a standalone business rather than selling to a big company such as Amazon or Google,” Recode reported.

After you’ve placed an order, Instacart instantly beams that information to the smartphone of one of its personal shoppers, who then goes to a local store, buys the groceries, and delivers the order at the arranged time. Much of that growth comes as a direct result of the company’s agile, crowdsourced marketplace model, which has ultimately allowed it to expand operations quickly and cheaply — unlike other companies that have to set up distribution centers in every new location. Recipe kit delivery services like Blue Apron and HelloFresh have also experienced massive growth in 2014 and offer a completely different, much more laid-back solution to the same problem. It’s hard to say which model will prevail in 2015, but regardless of wether there’s a clear-cut winner or loser, this mounting grocery delivery arms race is definitely a win for consumers.

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