Instacart was founded in 2012 by former Amazon employee turned serial entrepreneur Apoovra Mehta. Before coming up with the idea for Instacart, Apoovra, who studied engineering at the University of Waterloo after emigrating to Canada from India with his parents in 2000, worked at Blackberry and Qualcomm. While at Amazon, he helped develop fulfillment systems to help deliver packages from Amazon warehouses to people’s homes. Outside of the corporate world, he tried to launch nearly two dozen of his own ventures, including a platform connecting people with tech luminaries where they could benefit from one-on-one mentorship and a social app for lawyers. None of these ideas really took off — until Instacart.
The idea for Instacart was developed during Mehta’s time as a participant in Y Combinator’s Summer 2012 program. In line with his proven creativity, Mehta’s next idea was this: create an app where people can shop for their groceries, and someone else delivers them. For the first version of the app, Mehta said he scraped grocery store Safeway’s website for inventory. “Over the first few weeks, I built the app and placed the first order,” Mehta told NPR, explaining that because he was the only employee at the time: “I placed the order, went to the grocery store to pick up the order, and then delivered it to myself.”
Within three years, Instacart had over 200 employees. Originally launched in San Francisco, California, the platform’s success meant it was also operating in Atlanta, Miami, and Washington D.C. by the spring of April 2015. North Chicago, Illinois, Orange County, California, and Minneapolis, Minnesota were also put on the map the following year. The company expanded to Canada in 2017 and made a $65 million acquisition of Unata in 2018.
A Bigger Cart
Despite some serious battles over labor laws and ethics, like the payment of shoppers, Instacart has grown massively over the past eight years. It now partners with major retailers like Kroger, Aldi, Sam’s Club, Public, and Costco, has a presence across the US and Canada, and even expanded into same-day alcohol delivery services in 2019. In total, Instacart serves 500 retailers in 40,000 locations.
The coronavirus pandemic has only exacerbated Instacart’s growth ahead of a potential initial public offering (IPO) next year. A surge in demand for grocery delivery services meant that the company had to hire an additional 300,000 workers. Instacart workers threatened to strike in March over a lack of COVID-19 safety protocols, and it does not appear that the demands of the workers were met. Nonetheless, data from Apptopia shows a 218% increase in daily downloads of Instacart’s app. Furthermore, the company’s value has more than doubled in 2020. The latest round of funding, which brought in $200 million from existing investors Valiant Capital and D1 Capital Partners, brought the company’s total value to $17.7 billion.
“I’m incredibly proud of our team’s work to scale our business this past year and rise to meet the unprecedented consumer demand and growth,” Mehta said in a press release about the private fundraising round in October. “Their tireless efforts have allowed us to expand our marketplace ... and move grocery delivery into the mainstream. ... While we’re proud of these milestones, we believe we have a lot more work to do to deliver for all the communities we serve.”
It looks like Instacart may be planning to strike while the iron is hot. Though nothing is set in stone, people familiar with the situation have told news outlets that Instacart has plans for an IPO — possibly early next year — led by Goldman Sachs. It’s predicted that going public could nearly double Instacart’s value to a total of $30 billion, reflecting the company’s rapid growth amid the pandemic. A timely IPO is also supported by the success of California’s ballot proposal which upholds the status of delivery drivers as independent contractors.
In the meantime, Instacart has expanded its business offerings to include — in addition to groceries and alcohol — service for customers at major stores like Walmart, convenience chain 7-Eleven, and beauty retailer Sephora.
Instacart is one of several hot IPOs expected for early 2021.
About the Author
Jemima is a journalist who enjoys reporting on business, particularly small business and entrepreneurship.