Online grocery delivery startup Instacart’s $9.3 billion IPO is tomorrow, to raise $660 million

Instacart’s long-awaited IPO is finally here after months of waiting. The online grocery delivery startup is set to go public this Tuesday, marking one of the year’s most highly anticipated public offerings.

Following the successful IPO of Arm, a chip designer owned by Softbank, Instacart raised its proposed price range for the initial public offering (IPO) on Friday, revising it to a fully diluted valuation of as much as $10 billion. Previously, the company had considered pricing its offering in the latter part of the following week.

However, it has now opted for Monday as the pricing date, Bloomberg reported, citing individuals familiar with the matter and requested anonymity as they were discussing confidential information. Meanwhile, with a boosted IPO range, Instacart is seeking to raise up to $616 million in fresh capital, CNBC reported.

This fundraising effort will involve both new investments and the participation of existing shareholders, with the company’s estimated valuation falling between $8.6 billion and $9.3 billion. When considering all factors that might affect the number of shares available, including restricted stock units, stock options, and warrants, the total share count will reach 331 million.

With this new capital infusion, Instacart plans to enhance its platform through the integration of artificial intelligence and machine learning functionalities. The company foresees leveraging these AIML solutions to propel its future business growth. In line with this strategy, Instacart unveiled “Ask Instacart” in May, a search tool designed to respond to customers’ inquiries about their grocery shopping, tapping into the burgeoning realm of generative AI.

“We believe the future of grocery won’t be about choosing between shopping online and in-store,” CEO Fidji Simo wrote in the prospectus. “Most of us are going to do both. So we want to create a truly omni-channel experience that brings the best of the online shopping experience to physical stores, and vice versa.”

Instacart, a prominent player in the American online grocery delivery sector, had previously reduced its valuation from $39 billion to $24 billion in March 2022 due to declining public stock performance. By the end of 2022, reports indicated a further 50% drop in its valuation. Then last week, Instacart slashed its valuation again to just $9.3 billion.

Instacart is poised to become one of the standout IPOs of the year as it aims to break into the tech IPO market which has remained dormant since late 2021. In this highly competitive landscape, Instacart faces competition not only from traditional retailers but also from tech giants like Amazon, DoorDash, GoPuff, and Grubhub.

Founded in 2012 by Apoorva Mehta (a former Amazon employee), Brandon Leonardo, and Max Mullen, the San Francisco, California-based Instacart is a grocery startup that offers same-day grocery delivery service. Instacart has quickly scaled to over 220 markets and partnered with retailers across North America, including popular national chains (Albertsons, Kroger, Costco, Loblaw) as well as local, regional grocers (Publix, Wegmans, Schnucks, H-E-B).

Instacart is available to more than 85% of U.S. households and more than 70% of Canadian households with delivery and pickup services across more than 5,500 cities in North America. The company expects 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.