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Instacart Adds Slootman to Board; Signaling It May Go Public

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Lizette Chapman
·3 min read
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(Bloomberg) -- Instacart Inc. appointed Snowflake Inc. Chief Executive Officer Frank Slootman to its board of directors, another sign the grocery delivery startup is getting serious about going public.

Founder and Chief Executive Officer Apoorva Mehta said he has been speaking for months with Slootman -- who last September led his cloud software company through the biggest U.S. initial public offering of 2020 -- and considers him a “coach.”“He really likes to drive clarity on what the one thing is to focus on,” Mehta said. “Internally, there’s a lot of focus on what that one thing is.”Citing legal restrictions, Mehta declined to state what that “one thing” was. He also declined to answer additional questions about the company’s ambitions to go public.“In 20 years, they won’t care whether we went public through a DL, an IPO or a SPAC. They will care about the value we’re creating,” Mehta said, referring to the choices of a direct listing, initial public offering or merging with a special purpose acquisition company.Instacart last week announced a $265 million funding round that lifted its value to $39 billion, almost three times its value last June. The coronavirus pandemic has driven a surge in demand for grocery deliveries from homebound customers.

Instacart said it generated net revenue of roughly $1.5 billion in 2020 and saw monthly transaction volume increase 300% in December, compared with the same period a year earlier. The company also said it was profitable on an adjusted basis for the last three quarters of 2020.

In a hedge against whether food delivery will remain as popular after the pandemic abates, the San Francisco-based startup is bolstering two other businesses: advertising and enterprise services.Instacart said it increased the number of advertisers on its platform by 500% to more than 1,300 consumer packaged-good companies in 2020. The startup also builds the technology for grocery retailers like Wegmans, Costco Canada and Smart & Final, powering their apps, websites, coupon programs and ads.“We are in the very early stages of the first inning,” Mehta said. Groceries “is a trillion dollar category in the United States and worldwide it’s 10 to 12 trillion.”Slootman is an enterprise veteran who has led three companies through IPOs. Instacart formally announced his appointment on Thursday. Last month, the company added Fidji Simo, a Facebook Inc. executive, and Barry McCarthy, former chief financial officer for Spotify Technology SA and Netflix Inc., as directors.

While at Spotify, McCarthy helped pioneer the then-novel approach of directly listing shares of a company on the public market and bypassing a traditional IPO. Unlike an IPO, which lets companies sell new shares to raise money, a direct listing allows a startup to simply begin trading existing shares on the public market.

Instacart doesn’t necessarily need to raise money by selling shares. The company has more than $1.5 billion in cash after last week’s fundraising round, according to a person familiar with the matter, which placed Instacart as the second-most valuable startup in the country after SpaceX.

(Updates with Slootman formal announcement in the 11th paragraph.)

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