Instacart, the retailers' delivery service, raised $600 million in a fresh round of funding, giving it a valuation of $7.6 billion.
According to a report in Recode, the funding round was led by D1 Capital Partners, the hedge fund, and comes just six months after the startup closed on a $350 million round of investing. At that time, the company had a valuation of $4.35 billion.
“Grocery is the largest category within U.S. retail, and it is also one of the least penetrated online,” D1 Capital’s Daniel Sundheim said in a statement to Recode. “The industry is at a tipping point, and there will likely be a significant acceleration in the adoption of online ordering for grocery delivery over the next few years.”
Investors who have given Instacart more than $1.6 billion over the past six years are betting that grocery delivery will become a normal part of shopping, and that there will be room for multiple delivery companies other than Amazon. Instacart does have some challenges, reported Recode, pointing to the fact that it charges customers delivery and service fees, which makes it more of a luxury than a necessity. What’s more, the report noted that about 30 percent of its grocer partners mark up the prices in addition to the fees – and Instacart hasn’t turned a profit yet.
Recode also pointed out that Instacart has complicated relationships within its network of 50,000 workers who pick out and deliver groceries, which the company’s Founder and CEO Apoorva Mehta has vowed to improve. Mehta said the company plans to double the size of its staff with the new funding and create tools for greater efficiency. “We also want to make sure that Instacart is a household name,” Mehta noted. “That when people think about grocery shopping online, they think about Instacart first.”