Amazon’s arrival on the grocery scene with its acquisition of Whole Foods has done nothing to slow Instacart.
The grocery delivery start-up just raised $200 million in fresh funding — which boosted its valuation by nearly a billion dollars — and had its best year ever.
All the better to battle Amazon which, just last week, announced it is testing free two-hour delivery for Whole Foods groceries on Prime Now.
Instacart’s CFO, Ravi Gupta, told CNBC that the company now has “more money than we need,” and that the Amazon-Whole Foods effect has given the start-up “tremendous momentum.”
As Amazon’s acquisition of Whole Foods threatens to disrupt the entire grocery industry, American grocers are increasingly looking for ways to boost their e-commerce offerings — and are increasingly finding a partner in Instacart.
Just three months after the Amazon/Whole Foods deal, Instacart signed up all five top US grocers: Kroger, Albertsons, Ahold, Publix, and H-E-B. It also expanded its partnership with Costco, and gone international with its partnership with Canada’s largest grocer, Loblaw Cos.
“It’s been our best year ever, growing at 160% year over year, we’ve gone from 30 markets to 200 last year,” Gupta said. He says Amazon’s acquisition of Whole Foods “served as a catalyst for the entire industry to suggest that e-commerce is for real and everyone needs an e-commerce solution.”
“We were all the grocer’s first call,” he said.
And now, it’s raised a fresh round of funding, which Gupta says they’ll use to go into even more markets and double the size of their team.
The Series E round was led by two new investors, Coatue Management and Glade Brook Capital Partners, and also had participation from existing investors.
We asked Gupta whether Whole Foods, a previous investor, was involved. “Whole Foods did not participate in the round,” he said.
He also said the company won’t raise another round before going public.
The vote of confidence from the venture capital community — which boosted Instacart’s valuation to $4.2 billion, from $3.4 billion in its last financing round in March of last year — is a far cry from the uncertainty swirling around the grocery start-up after the Amazon-Whole Foods deal last year.
In 2016, Instacart signed a five-year deal to be the exclusive delivery provider for most Whole Foods goods. But since Amazon acquired the chain, it’s been boosting its delivery options and is now testing two-hour delivery of Whole Foods groceries to Amazon Prime customers in some U.S. cities.