Grocery delivery startup Instacart is on the brink of adding $400 million to its war chest, according to a source familiar with the fundraise.
It’s a massive fundraise for a company in a space that has slowed down significantly. While the on-demand – “Uber for everything startups” – used to be the hot tech investments, funding to companies that bring anything at the touch of the button has dramatically decreased in the last two and a half years. Deals for on-demand startups fell by nearly 25% in 2016 alone, according to CB Insights. Other companies, like SpoonRocket and Washio, which delivered food and laundry respectively, shut their doors completely.
Instacart’s rumored raise and valuation boost is a notable one amid a dearth in funding rounds. The new round of funding would value the delivery startup at $3 billion, the source said. Sequoia, a previous investor in the company, is rumored to be leading the round, but other existing investors like Whole Foods are unconfirmed. Axios first reported the news. Instacart declined to comment.
The round hasn’t closed yet, but is expected to close soon. When the cash lands in Instacart’s bank, it will bring the total raised by the five-year-old business to nearly $675 million.
Instacart is often mocked and compared to Webvan, a famous dot-com bust that also promised grocery delivery, but our source said that “misconception” is what causes people to miss out on its big business. Rather, Instacart has been transitioning its business to be more than 21st century milk delivery, and is focused on building integrations with stores to effectively bring their businesses online. The company is reportedly exploring outsourcing the delivery part altogether and focusing instead on its shoppers in stores.