San Francisco, CA – Instacart is not taking news of Amazon’s free two-hour delivery service sitting down.
The online grocery delivery service just raised $200 million in fresh funding, and boosted its valuation by nearly a billion dollars, CFO Ravi Gupta announced this week, according to Reuters.
This means the San Francisco-based company is now valued at $4.2 billion, and is ready to take on heavyweight Amazon.com, less than a week after we reported the eCommerce giant was now offering its Prime members in four cities free, two-hour delivery from Whole Foods stores.
This new round of funding was led by Coatue Management and included Glade Brook Capital Partners and existing investors. Instacart was previously backed by Sequoia Capital, Andreessen Horowitz and Whole Foods Market, among other investors. Whole Foods reportedly owns less than a 1% stake.
Instacart pays a network of roving shoppers to pick up and deliver groceries to customers who order through an app. Up until now, Whole Foods has been an important source of business; in 2016, Instacart signed a five-year deal to become the chain’s exclusive delivery service for perishables. Instacart currently shops for and delivers groceries for about 200 retailers, including Target, Costco and Sprouts Farmers Market.
When Amazon made its announcement there was speculation as to whether it would hinder or help Instacart. This recent round of funding could put that speculation to rest. Gupta said this additional funding could help the four-year old company have an even better year than 2017, when it grew 160%, its best year ever.