Instacart, the US grocery delivery company, has interviewed investment banks to advise on a public listing, as it looks to capitalise on a boom in business during the pandemic.

The San Francisco-based company said on Thursday that it had raised $200m in new funding led by existing investors Valiant Capital Management and D1 Capital, bringing its valuation to $17.7bn, including the new cash. 

Instacart’s fundraising came as it held discussions with banks about a long-awaited public offering, which could come as soon as the first half of next year, according to people with knowledge of the talks. The company declined to comment.

The fundraising marks the second round of capital Instacart has raised this year, underlining the quick pace at which start-ups benefiting from the pandemic have been able to attract investment. 

“The pandemic accelerated a lot of new user acquisition that I think would have happened anyway, over the next few years, into a shorter timeframe,” said Danny Karubian, a partner at Valiant, which first invested in the company in 2014. “The data so far is proving out that people are sticking with it because it’s a great product.”

Instacart hosts an online marketplace that connects users with “shoppers” delivering groceries from local stores. The company has struck partnerships with more than 500 retailers, including a pilot programme with Walmart in four markets in California and Oklahoma.

Sales have spiked during the pandemic, with total order volume on Instacart increasing 274 per cent in August compared with a year previously, according to credit card data compiled by Second Measure. That put it slightly behind Walmart in US grocery pick-up and delivery sales, according to the data, which did not include Amazon’s competing service.

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An initial public offering by Instacart is likely to be one of the largest in the US next year, bringing one of the last big private gig economy companies on to public markets. DoorDash, which has also expanded into grocery delivery, is expected to go public in the coming months.

Instacart turned a small net profit for the first time in April, people briefed on the numbers said, following a spike in sales that month as the US entered lockdown. 

The company had nearly $1bn of cash on its balance sheet following a fundraising it announced in June. It later added $100m to the same financing from funds advised by T Rowe Price, pegging its valuation at $13.8bn.

Instacart has faced backlash from some shoppers, who have voiced complaints about its tipping policies and response to the pandemic.

In California, Instacart and other gig economy companies including DoorDash and Uber have spent more than $180m combined battling a statute that could force them to reclassify their workers as employees and provide benefits. Californians will vote in November on a bill backed by the group seeking to create an exception for app-based workers. 

Via Financial Times