Instacart CEO Courts Investors, Skeptical Grocers Ahead of IPO
Once a pandemic darling, the grocery delivery startup has seen orders slow as the virus wanes
Instacart Inc., a 10-year-old grocery delivery startup that was once one of the most highly valued of its gig-economy generation, is preparing to go public, potentially plunging itself into the volatile stock market as it sets to prove itself in a post-pandemic world.
The company has confidentially filed documents with the Securities and Exchange Commission to start the process for a stock market listing, according to a statement Wednesday night, confirming an earlier Bloomberg report. The registration is expected to become effective after the SEC completes its review process.
Chief Executive Officer Fidji Simo now must convince investors that Instacart’s explosive growth during the Covid-19 lockdowns won’t fade along with the virus. Simo, 36, will be challenged not to squander the loyalty of millions of people who came to rely on the app during the long months of restrictions but now have opportunities to wander the fresh produce aisles again.
The pandemic caused order volumes to surge in early 2020 and helped Instacart to dominate grocery delivery in the U.S. But that success also spawned upstarts that have chipped away at Instacart’s market share and its grocery store partners have begun to question if their former white-knight has become a trojan horse intent on ruling online grocery sales and controlling voluminous amounts of consumer data. Since last year, as restaurants reopened and vaccine rates rose, orders have started to slip and Instacart slashed its private market valuation by almost 40% in March.
Instacart’s public debut could also come at a turbulent time in the stock market. Only two IPOs of more than $500 million have priced this year in the U.S. and the performance of newly public companies generally has been disappointing. Seeing the company through a successful IPO would be the next step in an ambitious plan Simo has laid for Instacart since the the former top Facebook executive was named CEO last July.
If Instacart follows through with its IPO, Simo will be in a rarefied field of women CEOs who have taken companies public. Instacart will be one of the biggest companies led by a woman to list its shares, alongside software maker VMware Inc., which had co-founder Diane Greene at the helm when it went public in 2007.
Michael Moritz, a partner at venture capital firm Sequoia Capital Ltd. and longtime Instacart investor and board member, likened Simo’s challenge to that of Satya Nadella’s, who took over Microsoft Corp. after former CEO Steve Ballmer left in 2014. “I see a lot of parallels,” Moritz said. “Satya took Microsoft back to its roots as a deep technology company that’s focused on the enterprise customer.”