Instacart has raised $600 million as part of a financing round led by D1 Capital Partners. The online grocery delivery company, which has raised $1.6 billion to-date, will use the funds to recruit engineers and product development talent, expand its presence in North America and increase awareness of Instacart at retail partner stores.
Instacart can currently reach more than 70% of U.S. households and 50% of Canadian households through its network, which includes more than 15,000 grocery stores across 4,000 cities. The delivery service’s retail partners include Kroger, Aldi, Loblaw, Sam's Club, Sprouts Farmers Market, Publix, Albertsons and Walmart Canada.
"The U.S. is nearly a $1 trillion grocery market, and last year we saw almost every major grocer in North America bring their delivery business online in a significant way,” said Apoorva Mehta, CEO and Founder of Instacart in a statement. “We believe we're in the very early stages of a massive shift in the way people buy groceries, and we expect that one in five Americans will be shopping for their groceries online in the next five years."
However, Instacart will face significant competition , including from first-party delivery networks:
- Amazon expanded Whole Foods delivery to 10 additional cities in September, reaching a total of 38, and added more neighborhoods to its existing service areas;
- Walmart is piloting a last-mile grocery delivery service, in addition to its widely-available curbside pickup options; and
- Target acquired Shipt for $550 million in December 2017 to bring its delivery service in-house, and plans to have its own curbside pickup service available at 1,000 stores by the 2018 holiday season.
Additionally, other third-party delivery services are benefiting from their own capital infusions and partnerships with large retailers. Postmates raised $300 million during a September funding round, while DoorDash raised $250 million in August after entering a grocery delivery partnership with Walmart in April.