Winners, losers and other key players

By | September 20, 2023

Founder and CEO of Instacart Apoorva Mehta

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

Online grocery delivery company Instacart (CART) today (September 19) made its long-awaited debut on the Nasdaq. The shares, priced at $30 each, rose 40% at the open, 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 as the stock market faltered due to 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 after an 18-month hiatus and the first venture-backed IPO in more than a year.

Instacart, founded in 2012, saw its business increase by up to 600% in the early months of the Covid pandemic. Growth slowed as Covid faded, but the company was 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 net income of $114 million, up from $8 million a year earlier.

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

Lead investors and individuals in Instacart’s IPO

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

Both Sequoia and D1 Capital invested in Instacart early enough to see a positive return (although Sequoia participated 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 came in after that likely suffered losses on their investments. Among these 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 lenders include Tiger Global Management and Coatue Management, according to PitchBook data.

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

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

All three cofounders and many of the early employees took the opportunity of the IPO to cash in on some of their founding capital.

Leonardo and Mullen each sold 1.5 million shares in 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 in executive, product and engineering roles, sold a total of 3.2 million shares in the IPO, according to Instacart’s S-1.

Mehta stepped down as CEO of Instacart in 2021 and named Fidji Simo, a former Facebook executive, as his successor. Subsequently, Mehta assumed the role of chairman of the company’s board of directors. He ceded that role to Simo even after the IPO to pursue other commitments.

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Read the original story Instacart’s $10 billion IPO: Winners, losers and other key players and more by Sissi Cao on Observer.

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