The on-demand startup space has scored another blockbuster funding deal.
Instacart, an on-demand grocery delivery service, confirmed Tuesday that it has raised $220 million in a Series C round of funding from a list of big name VC firms. The funding values Instacart at around $2 billion, according to a source familiar with the matter.
With the large cash infusion, Instacart plans to expand into new geographic markets and eventually expand into new product categories.
"Instacart's platform is very easily extensible to other things," Apoorva Mehta, founder and CEO of Instacart, said in a recent interview with Mashable. Similar to Uber, Instacart lets customers order groceries through a smartphone to be delivered quickly by couriers. Mehta declined to get specific about new product areas, but he suggested Instacart could deliver items not related to grocery stores and perhaps broaden out to more general logistics.
Mehta worked as a supply-chain engineer at Amazon in the late 2000s and gradually recognized some of the problems with Amazon Fresh, the company's grocery delivery service. In 2012, he founded Instacart to take on Amazon and others, and managed to attract top tier investors like Michael Moritz, who had been burned during the dot-com era when Webvan, a similar grocery service, suffered an epic collapse.
The startup's revenue increased tenfold in 2014 as it expanded to new cities throughout the U.S. and inked partnerships with grocery chains like Whole Foods Market and Fairway. There are now more than 4,000 "personal shoppers" on Instacart's platform who purchase and deliver products to consumers.
Investor optimism for Instacart comes at a time when startups like Uber, Lyft, Postmates, Deliv, Shyp and others are collectively raising billions to deliver instant gratification to consumers. The latest Instacart funding round was led by Kleiner Perkins, with participation from Comcast Ventures, Sequoia, Khosla Ventures and Andreessen Horowitz, among others.
“Instacart’s smart use of technology has enabled it to soar in a category that’s been plagued by infrastructure issues for many years –- they have a completely new way of enabling retail delivery,” Jeff Jordan, a partner at Andreessen Horowitz and an Instacart board member, said in a statement.
Instacart initially set out to raise about $150 million in funding a little more than a month ago, according to Mehta, but it proved to be a "very competitive round." Less than three years after starting the company, Mehta now finds himself in the position of running a fast-growing service with a multi-billion valuation and more than 100 full-time employees.