Sequoia Capital and Andreessen Horowitz, two of Silicon Valley’s most well-known venture capital companies, are about to suffer a significant loss on their most recent investment in grocery delivery business Instacart. The deal was finalised in 2021 during a period of surging tech stocks.
Instacart said it intends to offer shares at a price between $28 and $30 per share, valuing the business at a maximum of $10 billion, in its most recent IPO prospectus update, issued on Friday.
That is more than 75% below the level at which Sequoia and Andreessen invested in the beginning of 2021. Instacart valued itself at $39 billion at the time and sold shares for $125 each. Due to Covid shutdowns, the delivery industry was flourishing, and Instacart’s services were seeing record-breaking demand.
Nick Giovanni, the financial head of Instacart, stated in a news release at the time that “this past year ushered in a new normal, transforming the way people shop for food and commodities.”
Instacart and its investors have since discovered that the growth experienced over those two years was anything but typical. Instacart was ending a quarter in which sales increased by 200%. Sales increased nearly sevenfold from the previous quarter.