Facing a rapidly evolving market, grocery delivery pioneer Instacart has made a decisive move to decrease its valuation by 40% from its previous estimate of $39 billion, settling now at $24 billion. The company believes this adjustment will better position it to attract industry-leading talent.
Instacart’s Tumultuous Times
The service, which became a household name during the COVID-19 lockdowns when home delivery became a necessity, has built partnerships with more than 750 retailers across the United States and Canada, bringing online shopping and delivery right to the doorstep of countless North American homes.
Despite its initial success, Instacart’s shoppers, represented by the Gig Workers Collective with over 13,000 members, began a noticeable #DeleteInstacart campaign in the latter months of 2021, expressing their grievances about diminishing pay and risky work conditions.
Their demands are straightforward: higher default tipping levels, death benefits related to their work, and compensation based on individual orders, not batches. The company, which had to address a lawsuit for tip misappropriation back in 2019, claims that their pay models have remained constant since then.
In response to a walkout, the company did extend certain health benefits to its workers in March 2020.
Instacart’s Changing Market Worth
Instacart’s humble beginnings date back to 2012, founded by Apoorva Mehta, a former Amazon engineer. The company first turned a profit in April 2020, with a noteworthy $10 million.
During its latest investment round in March 2021, Instacart attracted $265 million in funding from notable investors, positioning its valuation at an impressive $39 billion.
The company hopes this strategic reduction in valuation will not only help maintain its current talent pool but also draw new skilled individuals to the team.
The firm stands by its workforce, stating, “Markets rise and fall, but we’re dedicated to Instacart’s long-term goals of transforming the grocery industry with our partners.”
Although having earned $1.8 billion in revenue during 2021, increased inflation and rising interest rates loom over its future financial forecasts.
In a recent development on March 23, Instacart unveiled the Instacart Platform, a suite of software solutions aimed at optimizing e-commerce operations for various clients. The new offering is anticipated to bolster the company’s financials and attract investor confidence, especially when considering a prospective public offering.
“Our new platform is a testament to our commitment to retail innovation, making it easier for our partners to keep pace with an ever-changing technology landscape,” commented Fidji Simo, the CEO of Instacart.
Market experts speculate that an IPO could be on the horizon for Instacart by the end of the year, although no official declarations have been made. With the anticipated public listing, the company could further broaden its scope and introduce a variety of new services to its offerings. In an interview with Studio 1.0, Simo reflected on the potential IPO, saying, “It’s a definite future step, but the company we introduce to the public will mirror our renewed and ambitious vision.”
