Instacart raises $225 million at $13.7 billion valuation

Facing unprecedented growth, Instacart has secured new funding to keep up with demand. The San Francisco company announced today that it has raised $225 million in a round led by DST Global and General Catalyst. Existing investor D1 Capital Partners participated in the round, which brings Instacart’s valuation to $13.7 billion.

Instacart will use the cash to invest in shoppers and partners, build out its advertising and enterprise business, and focus on customer experience, per Apoorva Mehta, founder and CEO of Instacart in a statement. The company will also invest in technical and operational infrastructure to help customers get their groceries on time, with orders up 500% year over year.

The round comes during a time when racial tensions are heightened following the police killing of George Floyd, an unarmed black man. In the days after his death, many tech companies have spoken out about the tragedy. Last week, Instacart said it would invest $1 million to support its internal teams and “help support actionable change,” Mehta tweeted. Of that $1 million, $500,000 will go to compensate in-store shoppers and teams, with the rest going to nonprofit organizations like the Equal Justice Initiative and others.

That $10 million figure referenced in Instacart shopper-activist Vanessa Bain’s tweet above is the amount of money Instacart has spent on a ballot measure to keep shoppers classified as independent contractors.

Instacart, which heavily relies on independent contractors to shop and deliver groceries to customers, announced plans to grow its shopper network by nearly 250%. Its services are available at 30,000 stores across the U.S. and Canada.

The Y Combinator graduate claims it is accessible to 85% of households in the United States and more than 70% of households in Canada.

During the COVID-19 pandemic, Instacart became an essential service with essential workers putting their lives on the line to get people their groceries. Millions of families have turned to the platform to get groceries without the health risk of going to a grocery store, all while the company is hiring hundreds and thousands of shoppers to address this exact demand. The growth in sales has led Instacart to turn its first profit, reports The Information. But amid this hyperventilating growth, many Instacart shoppers are disgruntled with Instacart and the way it operates.

Shoppers, however, have been frustrated with Instacart for years — at least since 2016, when independent contractors boycotted the app over the elimination of tips. Since then, full-service shoppers, who are classified as independent contractors, have consistently spoken out against the company. In October, Instacart shoppers organized around better wages and changing the default tip setting to at least 10%. Amid the pandemic, shoppers went on strike nationwide to demand better safety protections, pay and an extended sick pay policy. To date, Instacart has made some changes, but has left much to be desired.