With the pandemic fueling a surge in demand for food delivery, the sector has been hot as of late.
Last year saw Just Eat Takeaway (OTC:TKAYF) acquire GrubHub (NYSE:GRUB) in a $7.3 billion deal. In December, DoorDash (NYSE:DASH) went public, finishing its first day of trading with a market capitalization of more than $60 billion.
With a number of companies competing with each other in the sector, Instacart announced yesterday it has raised $265 million in a new financing round at a valuation of $39 billion. Instacart's new valuation makes it the second-most valuable startup in the U.S. after SpaceX, which has a valuation of $74 billion, according to Pitchbook.
Yesterday's announcement marks the second time Instacart has seen its valuation double since the beginning of the pandemic. Instacart previously raised $200 million at a $17.7 billion valuation less than five months ago. Existing investors such as Andreessen Horowitz, Sequoia Capital, D1 Capital Partners, Fidelity Management & Research Company LLC and T. Rowe Price Associates were among the investors in the latest round. Instacart said:
"Today's fundraising reflects the strength of Instacart's business, the growth our teams have delivered, as well as the incredible opportunity ahead."
"This past year ushered in a new normal for millions of people and changed the way we shop for groceries and goods."
Instacart says it now partners with nearly 600 national, regional and local retailers to offer food delivery and pickup services to over 85% of U.S. households and 70% of Canadian households.
The new funds will be used to increase corporate headcount by 50% in the first half of 2021 as well as to invest in various initiatives such as Instacart Marketplace, Instacart Advertising and Instacart Enterprise.
"This past year ushered in a new normal, changing the way people shop for groceries and goods," Instacart CFO Nick Giovanni said:
"While grocery is the world's largest retail category with annual spend of $1.3 trillion in North America alone, it's still in the early stages of its digital transformation. As online grocery penetration increases over the coming years, we'll continue to invest in our people, products and partners to support all of the communities we serve."
As food delivery companies continue to see unprecedented demand, it may not be long before Instacart follows in the footsteps of DoorDash and goes public or sees itself get acquired like GrubHub.