Online-Grocery Delivery Service Instacart Lands $220 Million From Kleiner Perkins
Online-grocery delivery service Instacart said venture firm Kleiner Perkins Caufield & Byers led its latest funding round totalling $220 million.
The company will use the cash to grow into new markets, both internationally and in the United States, Chief Executive Officer Apoorva Mehta said in an interview.
Kleiner also backs transportation service Uber, which aspires to expand beyond offering rides and so could be viewed as an Instacart competitor. Last year, Uber launched Uber Essentials, a service that delivers nonperishsable grocery and drugstore items in Washington, DC.
But Mehta said he did not see Uber as a rival.
"There are potential ways we can work with them rather than compete with them," he said, adding that he has talked to Uber executives about possible collaboration but has nothing to disclose currently.
Uber did not immediately respond to a request for comment.
Instacart also plans to start experimenting with other categories beyond groceries, Mehta said. While he declined to identify specifics, he said the service would likely stick to items consumers buy regularly rather than one-off items such as televisions and laptops.
Unlike grocery-delivery services from Amazon and Wal-Mart, Instacart relies on individuals who visit stores to buy goods for customers, rather than storing the products in a warehouse. That cuts down on overhead, Mehta said.
He also dismissed concerns over competition from errand services such as TaskRabbit, because Instacart is specialized, allowing shoppers to check boxes rather than type out long lists on their smartphones.
The latest funding round, which values Instacart at $2 billion, comes months after a $44 million round in June. Then, the company was valued at around $400 million.
Instacart deserves a high valuation, said Kleiner partner Mood Rowghani, because its convenience factor will drive the popularity of on-demand retail far beyond today's levels.
"We see far-reaching potential beyond merely grocery," he said, comparing Instacart to Amazon in its early days, when the online retailer focused only on books. "This business offers mainstream appeal."
Other new investors in the latest round include Comcast Ventures, Dragoneer Investment Group, Thrive Capital, Valiant Capital, along with existing investors Andreessen Horowitz, Khosla Ventures and Sequoia. Instacart has now raised $275 million, it said.
All the funding is primary, Mehta said, meaning it is going to the company rather than for use to buy out existing shareholders such as early employees.
(Reporting by Sarah McBride; Editing by David Gregorio)