Instacart’s $10 Billion IPO: Winners, Losers and Other Key Players

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Instacart founder and CEO Apoorva Mehta

Apoorva Mehta, cofounder and former CEO of Instacart. Lea Suzuki/The San Francisco Chronicle via Getty Images

Online grocery-delivery company Instacart (CART) today (Sept. 19) made its long-awaited debut on Nasdaq. Shares, priced at $30 apiece, popped 40 percent at opening, valuing the company at $14 billion at today’s high.

Instacart filed to go public in May 2022 but delayed the actual listing late last year when the stock market faltered amid high inflation and recession fears. It is among a handful of technology companies that have gone public in recent months as the U.S. IPO market slowly reopens from an 18-month pause and the first venture-backed IPO in more than a year.

Instacart, founded in 2012, saw its business soar as much as 600 percent in the early months of the Covid pandemic. Growth has slowed as Covid subsides, but the company has been able to maintain a viable business model. Instacart became profitable for the first time in the second quarter of 2022, according to the company’s S-1 filing last month. In the latest quarter, it reported a net income of $114 million, up from $8 million a year prior.

Instacart priced its IPO at $10 billion, providing a decent exit for its early investors and founding employees. But the valuation is down significantly from its peak of $39 billion in early 2021.

Key investors and individuals in Instacart’s IPO

Venture capital powerhouse Sequoia and hedge fund D1 Capital Partners are Instacart’s largest shareholders, owning 15 percent and 14 percent of the company, respectively, before the IPO, according to Instacart’s S-1. After the new share issuance, their stakes were reduced to 14 percent and 13 percent, respectively.

Both Sequoia and D1 Capital invested in Instacart early enough to record a positive return (although Sequoia did participate in a round in 2021 when Instacart was valued at $39 billion). The last time Instacart was valued at around $10 billion was in 2018. Investors who jumped in after that likely suffered losses on their investments. Among them are private equity firms DST Global and General Catalyst, according to PitchBook. Both participated in a 2020 round that valued Instacart at $13.8 billion.

Instacart’s other venture backers include Tiger Global Management and Coatue Management, according to PitchBook data.

Sequoia partner Ravi Gupta, who was Instacart’s financial and operating chief from 2015 to 2019, and D1 Capital founder Daniel Sundheim both sit on Instacart’s board of directors.

The company’s three cofounders—Apoorva Mehta, Brandon Leonardo and Maxwell Mullen—collectively owned 17 percent of the company before the IPO. Mehta, Instacart’s former CEO, owned an 11 percent stake while Leonardo and Mullen each owned 3 percent.

All three cofounders and several early employees took the IPO opportunity to cash out some of their founding equity.

Leonardo and Mullen each sold 1.5 million shares at today’s offering, and Mehta sold 700,000 shares. Mark Schaaf, Instacart’s chief technology officer, sold nearly half of his company stake, about 300,000 shares. A group of unnamed former employees, including those who were in executive, product and engineering roles, sold a combined 3.2 million shares at the IPO, according to Instacart’s S-1.

Mehta stepped down as Instacart CEO in 2021 and appointed Fidji Simo, a former Facebook executive, as his successor. After that, Mehta assumed the role of the company’s board chair. He has handed that role over to Simo as well after the IPO to pursue other endeavors.

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Read the original story Instacart’s $10 Billion IPO: Winners, Losers and Other Key Players and others by Sissi Cao at Observer.

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