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Andreessen Horowitz bets $44M on Instacart

Above: Instacart is an app and a website where customers can order groceries form local stores.

Image Credit: Myriapod, Flickr

Grocery delivery startup Instacart just raised $44 million from Andreessen Horowitz.

Apoorva Mehta founded the company in 2012 to help city dwellers shop for groceries from home. On paper, Instacart’s valuation sits around $400 million, a VentureBeat source claims. This valuation mirrors a figure previously cited by TechCrunch.

Existing investors, including Sequoia, also participated in the round, as did Box chief executive Aaron Levie and Y Combinator president Sam Altman.

To monetize, Instacart sets its own prices for goods — a decision that recently resulted in a cease and desist order from a key supplier, Trader Joes, a source familiar with the matter claims. That system quietly inserts additional fees and often pushes the price of goods above other competing services.

In a phone interview, Mehta refused to comment on the Trader Joes ban.

Now live in 10 U.S. cities, Instacart plans to launch in 7 additional cities by the end of the year. Instacart claims its revenue has grown by 15x over the past nine months  — although such a stat is meaningless without detailed figures.

In an official release, Instacart touts that it’s “the only service that can deliver groceries from multiple local stores within an hour.” However, competing startups like WunWun and Postmates advertise similar services.

More information:

Andreessen Horowitz is a $950 million venture capital firm that was launched on July 6, 2009. Marc Andreessen and Ben Horowitz are the general partners of the firm.... read more »

Instacart (YC S12) is a same-day grocery delivery startup offering delivery in as little as 1 hour. Focused on delivering groceries and home essentials, the company is looking to expand to other verticals very soon. Instacart already ... read more »

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20 comments
Shahmir Khan
Shahmir Khan

Muhammad Zohaib, Muhammad Mehmood Ali, Talaal Burny.

Ronnie M
Ronnie M

Man.. This tech bubble is going to be severe...

Dan Richardson
Dan Richardson

I love Instacart. It's so convenient AND they I can choose to have them get my groceries from union grocery stores, so I'm not fueling an evil empire of amazon.

Dan Richardson
Dan Richardson

Instacart is life changing. I was an avid peapod person, but if I didn't have my order in by Thursday, all the weekend times would be taken. On Instacart, I have put in an order at 10 am on a Sunday and had groceries at my house by noon.

Manish Patel
Manish Patel

Josh Poulain. Al fair points. I am just cynical of business models where you hope to get bought. I would rathers VCs pump more into orphan drugs, clean water. We have enough niche service products.

Luis Pichardo Longo
Luis Pichardo Longo

Josh clearly an employee of instacart. Fellow interwebs users let's reveal this guy's true identity

Josh Poulain
Josh Poulain

Wrong. Instacart is huge, with a high profit margin and an expansion plan that costs next to nothing to enter each new market. Within their first 3 weeks they did 10,000 orders and that was only in a narrow area within San Fransisco. Now they're in 10 markets and expanding to another 7 by year's end. That $44 million will be put to good use. Especially if someone like Amazon decides that their business model is infinitely better than the model of Amazon Fresh (which it is) and decides to buy Instacart in a year or two.

Josh Poulain
Josh Poulain

PS - I don't work for Instacart, I'm just framiliar with their & Peapod's business model and Instacart is a clear winner. Investors are obviously seeing that potential as well

Josh Poulain
Josh Poulain

Peapod isn't on the West Coast (where Instacart started), and their website & mobile app are awfully designed, their reviews are split between really awesome and really horrible, and they are based on the same warehousing model that has seen countless other brands go bankrupt - the only reason Peapod hasn't yet is because they're owned by a grocery chain which they use as their warehouse. Instacart's business model is a much more modern model which a much higher margin and easier to expand from city to city without requiring tens of millions of investment into infrastructure for each new market (like what Peapod requires).

Manish Patel
Manish Patel

Why? There is already peapod and multiple others. There is found money and then there is lost money.