Whole Foods said to take stake in Instacart
As more Whole Foods customers choose to avoid the store and get groceries delivered to their homes through Instacart, the high-end supermarket chain is taking a stake in the 4-year-old startup.
Instacart Inc. authorized the sale of new equity earlier this year, letting Whole Foods Market Inc. buy shares in the startup in conjunction with an expanded partnership, said people familiar with the transaction.
Analysis by private stock market operator Equidate pegged the total equity authorization at about $36 million.
The shares were added to Instacart’s previous funding round at the same share price from late 2014, which valued the company at about $2 billion, according to the filing.
Before the Whole Foods investment, Instacart had raised more than $270 million, according to data compiled by Bloomberg.
Grocery delivery startups have brought in more investor dollars than companies that deliver prepared meals, a reversal from previous years, according to research firm CB Insights.
However, as the fundraising market becomes more competitive overall, startups are making cuts and emphasizing how close they are to supporting themselves with their own earnings. Instacart is no exception: Apoorva Mehta, the startup’s chief executive officer, said on stage this month at a TechCrunch conference that his company will be cash-flow positive in the next 12 months.
Whole Foods first teamed up with Instacart on a delivery program in 2014 and has since expanded to more than 25 markets across the U.S.
In March, the two companies said they would increase the number of Whole Foods stores with “embedded Instacart shoppers” by up to 50 percent this year. Business website Recode previously reported that Whole Foods would invest in Instacart, without deal terms.
Grocery delivery is a key initiative as Whole Foods tries to claw its way out of its biggest sales slump since 2009. Whole Foods has suffered under its reputation for being overpriced. That’s added pressure to make its shopping experience more convenient.