Instacart’s latest IPO update filed on Friday stated that it will sell shares between $28 and $30 a piece, valuing Instacart at $10 billion at its highest. That’s 75% less than what Sequoia and Andreessen paid in early 2021. Instacart had sold shares for $125 each, valuing the company at $39 billion. Instacart was experiencing record demand for its services due to the Covid closures. Instacart had just closed out a quarter where revenue grew 200%. In the previous quarter, sales had risen almost sevenfold. Instacart said it was preparing to increase head count by 50% and bolster investment in advertising.
Sequoia’s Mike Moritz, who led his firm’s investment and recently announced his departure after 38 years, said in the same press release that Instacart was “fulfilling its role as a vital service for consumers, a reliable partner for retailers and an effective platform for advertisers.” Fidelity,
T. Rowe Price
, D1 Capital Partners and other investors also took part in this financing round. Investors began to demand that cash-burning firms find a way to profitability as consumers started shopping in person again on tighter budgets. The Nasdaq experienced its biggest drop since 2008’s financial crisis. Venture firms also haven’t seen real returns on IPOs since 2022’s market collapse. Instacart’s revenue increased 15% in the latest quarter compared to last year, and operating expenses have decreased over that time, allowing it to become profitable. Revenue increased 15% in the latest quarter from the year prior, and operating expenses have come down over that time, allowing the company to turn profitable.
From a valuation perspective, the bigger issue is that Instacart raised the $39 billion round during a record stretch of tech IPOs, and just a couple of months after fellow sharing-economy companies
and DoorDash had blockbuster offerings.
There hasn’t been a notable venture-backed tech IPO in the U.S. since late 2021, and Instacart and Klaviyo are the only two that have publicly filed recently. Car-sharing service Turo is also on file, but its initial prospectus came out in early 2022.
Fortunately for Sequoia and Andreessen, they began investing in Instacart when the company was in its early days and the stock price was much lower than it is today. Limited partners can still make a lot of money if the stock price continues to rise. Because of the lock-up period, the firms can’t begin selling shares until 180 days after the offering.
Sequoia is the largest investor in Instacart, with a 15% stake on a fully diluted basis. Its 400,000 shares purchased in 2021 represent a tiny fraction of its 51.2 million total shares. In total, the firm has invested about $300 million for a stake that would be worth over $1.5 billion at the top of the range.
Sequoia led Instacart’s $8.5 million Series A round in 2013, when the price was just 24 cents a share, according to the prospectus. Andreessen led at $2.98 and Sequoia took part. Both firms were in the Series C at $13.31 a share and the Series D at $18.52.Because Andreessen’s total ownership is below 5%, its full stake isn’t disclosed in the prospectus.Representatives from Sequoia and Andreessen declined to comment.Not until 2020 did Instacart’s share price climb to around where it is today, in a $200 million round led by Valiant Peregrine Fund and D1. Sequoia and Andreessen did not participate in the $200 million round led by Valiant Peregrine Fund and D1. Arm, which was taken private by SoftBank in 2016, reentered the public market on Thursday and jumped 25% in its debut.WATCH:
Arm is IPOing profitably