$210 Mn Raised by the Poster Child of On-Demand Economy

Instacart, a grocery delivery startup, has raised $220 Mn in new investment round. The valuation of the company now stands at $2 Bn, as reported by Re/code. Six months back, the company had raised $44 Mn reaching a valuation of $400Mn. The US based startup has shown promising growth this year. Instacart’s revenue this year is expected to cross $100 Mn, 10 times of that of 2013, as cited by the CEO to the New York Times.

Services offered by Instacart mainly include providing an online platform to customers to order groceries online from local stores such as Whole Foods and Cosco. Instacart delivers the orders the very same day. The company is looking forward to expanding into other areas as well next year. The recent acquired funds would be ideal for its next upcoming initiatives. The business model of Instacart is not based on a new concept. Companies like Webvan and Kozmo have tried their hands on same day grocery-delivery service and have failed. But these companies brought this service around a decade ago which may not have been a good time to expect demand for such a service.

Urban residents are now showing renewed interests in same day grocery-delivery service. The massive fund acquisition by Instacart comes at an ideal time. Instacart is leveraging the concept of on-demand economy which has gained popularity in recent times. The concept can simply be defined as the creation of economic activity by technology companies that fulfill consumer demand via immediate delivery of goods and services. A popular example has been that of the Uber experience. The concept has indeed brought the next level of customer experience.

Big grocery chains are showing concerns over Amazon expanding its grocery delivery business. Instacart is capitalizing on this fact and is taking advantage of surging investor interest in this category. The massive investment would help Instacart in establish itself as a standalone business. Prominent investors in the firm include Andreessen Horowitz and Kleiner Perkins.