CEO DailyCFO DailyBroadsheetData SheetTerm Sheet

Will Instacart be an Amazon… or a Groupon?

October 4, 2021, 3:07 PM UTC

Happy Monday, readers.

Fortune unveiled its annual Most Powerful Women’s list on Monday, with former Facebook executive and Instacart CEO Fidji Simo among the ones-to-watch

And the titling of that list could not be more on the nose. Leaving controversy-merled Facebook earlier this year, Simo jumped into a company facing its own fires as the return of a more in-person economy raises questions about if grocery delivery decacorn, Instacart, can maintain the $39 billion it won in the heat of the pandemic. The fact that founder Apoorva Mehta was quite pitching DoorDash over an acquisition of the company around the summer only fanned concerns about the company’s eventual fate.

My colleague, Maria Aspan, took a deep dive into Simo and what the future of Instacart under her leadership may look like. Here’s an excerpt, pointing to Simo’s time at Facebook:

“She also had powerful internal sponsors, including WhatsApp chief Will Cathcart and, eventually, founder and CEO Mark Zuckerberg, who both helped Simo develop her internal voice and her reputation for delivering blunt criticism—sometimes to Facebook’s most senior executives. During a big day of sales meetings with some of Facebook’s largest advertising clients, her bosses started goofing off, passing notes and ignoring the clients. So Simo, then a junior product manager, pulled aside Andrew ‘Boz’ Bosworth—Zuckerberg’s close deputy—and told him to knock the hijinks off. ‘He did not take it the best way in the moment,’ Simo recalls, though Bosworth, soon to be Facebook’s chief technology officer, now jokes about the incident.”

It’s a picture of Simo, unafraid to question the status quo—an admirable characteristic, certainly. But the biggest concern the story raises is not about Simo’s leadership acumen, but demand for Instacart’s services outside of the pandemic. ​​Here’s another excerpt from the article, quoting Forrester e-commerce analyst Sucharita Kodali: “Instacart and its competitors… all think that they’re going to be the next Amazon. But really, they’re all positioned to be the next Groupon.”

And well, we know what happened to Groupon. Once valued at $30 billion, it’s now a $691 million business on the Nasdaq

Even if you disagree with Kodali, it is true that Instacart is facing plenty of competition. Aside from Amazon and Uber, there are even startups that see Instacart’s model, acting as a middleman between grocery stores and consumers in need of delivery, as outdated and inefficient. 

In New York City, companies including JOKR, Fridge No More, Gopuff, and Gorillas have all raised millions (to varying degrees), arguing they can cut costs compared not only to the delivery upstarts, but also the supermarkets because they: a) operate smaller “dark” fulfillment centers rather than sprawling stores, and b) have better tech to predict demand, thereby reducing food waste and perhaps better routing software that allow drivers to make the same number of stops in a shorter period of time.

While each of these businesses have differences, some are aiming more at convenience stores than supermarkets, there have been signs that a bubble is, at the very least, jiggling. Berlin-headquartered Gorillas, which raised $290 million in March, last week laid off workers and paused its U.S. expansion for the rest of 2021, saying it would focus on New York City. 

And while no one believes they will be the ones to fold first in this game of poker, even those inside the broader food-delivery space believe some consolidation is to come.

“There needs to be more than one or two players,” JOKR CEO and Founder Ralf Wenzel told me in July, not long after raising $170 million in Series A funding. “The other part is, yes, there will be consolidation.”

The bottom line: Instacart’s current $40 billion valuation as part of the purely grocery-delivery space looks to be in danger. Which means the company will have to expand, and do so relatively quickly. Part of that plan is to be some kind of “Shopify/Amazon/Facebook hybrid that will sell tech, ads, and data services to enterprise customers while speeding up its consumer-facing delivery options.” Read more.

SIMO’S NEW STARTUP: Aside from her job at Instacart, Simo is also launching a women’s health startup. Read that here.

Lucinda Shen
Twitter: 
@shenlucinda
Email: 
lucinda.shen@fortune.com

Jessica Mathews compiled the IPO and SPAC sections of this newsletter.

VENTURE DEALS

- Byju’s, an Indian edtech, raised about $300 million valuing it at $18 billion, per TechCrunch. Oxshott Capital Partners led and was joined by investors including XN Exponent, Edelweiss, Verition Master Fund, IIFL, and Time Capital Advisors.

- Ladder, a Palo Alto, Calif.-based life insurance startup, raised $100 million in Series D funding valuing it at $900 million. Thomvest Ventures and OMERS Growth Equity led the round.

- Ula, an Indonesian B2B e-commerce marketplace, raised $87 million in Series B funding. Prosus Ventures, Tencent, and B-Capital led the round and were joined by investors including Bezos Expeditions, Northstar Group, AC Ventures, and Citius.

- All Day Kitchens, a San Francisco-based restaurant delivery company, raised $65 million in Series C funding. Lightspeed led the round and was joined by investors including GIC.

- Sunday, a Denver-based lawn care startup, raised $50 million in Series C funding. BOND led the round and was joined by investors including Sequoia Capital, Forerunner Ventures, and Tusk Ventures.

- Ontop, a remote global hiring and payments solution with founders currently in Miami, raised a $20 million Series A, led by Tiger Global and Point72 Ventures, with participation from SoftBank’s Opportunity fund. 

- Jurny, a Los Angeles-based hospitality tech company, raised $9.5 million. Mucker Capital led the round.

- Autoleap, a Toronto-based auto-repair company, raised $18 million in Series A funding. Bain Capital Ventures led the round and was joined by investors including Threshold Ventures.

- Orchest, a Palo Alto, Calif.-based maker of tools for data scientists, raised $3.5 million in seed funding. Gradient Ventures and Basis Set Ventures led the round.

- ProductWind, a Seattle-based  influencer marketing company, raised $1.7 million in seed funding. Early Light Ventures led the round.

- PHYTunes, a Palo Alto-based wireless-wireline and 5G company, raised $1.5 million with investors Deutsche Telekom´s hub:raum, Draper University Ventures, and Quake Capital.

PRIVATE EQUITY

- Clayton, Dubilier & Rice won the very heated bid for Morrisons (LON: MRW), the U.K.-based grocery chain, for about 7 billion pound ($9.5 billion).

- BMC Software, backed by KKR, acquired StreamWeaver, a New York City-based software maker focused on data integration in companies. Financial terms weren't disclosed.

- Beemok Capital acquired Charleston Place Hotel, a Charleston-based hotel. Financial terms weren't disclosed. 

- Comitis Capital acquired a stake in PetCo GmbH, an Austrian supplier of premium dog and cat food. Financial terms weren't disclosed.

- GTCR acquired PPC Flexible Packaging, a Buffalo Grove, Ill.-based packaging manufacturer. Financial terms weren't disclosed.

- Kaho Partners formed Premier Outdoor Living, a maker of outdoor building products and furniture, through the merger of RPI and Highwood USA. Financial terms weren't disclosed.

- North Castle Partners invested in Glow Recipe, a skincare brand targeting Gen Z and millennial consumers. Financial terms weren't disclosed.

- Pharos Capital Group acquired THEMA Health Services, a provider of hospice, skilled home health, and palliative care services throughout the state of Arizona. Financial terms weren't disclosed.

- Wavecrest Growth Partners invested in Login VSI, a Woburn, Mass.-based maker of desktop performance testing software. Financial terms weren't disclosed.

EXITS

- Sun Life Financial agreed to acquire oral healthcare company DentaQuest (NYSE: SLF), a Boston-based oral care company, for $2.5 billion. Centerbridge will exit the company.

- TPG Capital and Malaysia’s Johor are weighing a deal to take KPJ Healthcare, a Malaysian provider of healthcare services, private. The company is valued at about $1.3 billion.

- Gryphon Investors acquired Southern HVAC, a residential HVAC company, from MSouth Equity Partners. Financial terms weren't disclosed.

OTHERS

- Singapore Technologies Engineering will acquire Roper Technologies’ (NYSE:ROP) Transcore business, a provider of RFID tech for toll applications, for about $2.7 billion.

- Southwest Gas Holdings is in advanced talks to acquire Questar Pipeline Company, Dominion Energy’s gas transportation and storage business, per Reuters. Warren Buffett previously sought to buy the latter.

- Vanguard acquired Just Invest, an Oakland, Calif.-based maker of personalized indexing and money management software. Financial terms weren't disclosed.

- NetApp acquired CloudCheckr, a Rochester, N.Y.-based cloud insights software maker. Financial terms weren't disclosed.

IPO

- Volvo Car Group, a Swedish-headquartered car company, plans to raise at least $2.9 billion in an IPO in the country, per Bloomberg. Zhejiang Geely Holding Group owns the firm.

- Rivian, an Irvine, Calif.-based electric truck and SUV company, filed for an IPO. The company reported a net loss of $1 billion in 2020, and it has yet to report material revenue. Amazon and Ford Motor back the firm.

- GitLab, a remote web-based development operations company, plans to raise up to $624 million in an offering of 10 million shares priced between $55 and $60 per share. The company posted $152.2 million in revenue in the 12 months ending in Jan. 2021 and a net loss of $192.2 million. August Capital, Google Ventures, ICONIQ Capital, and Khosla Ventures back the firm.

- IHS Holding, a London-based telecom infrastructure developer, plans to raise up to $540 million in an offering of 23 million shares priced between $21 and $24 per share. The company posted $1.4 billion in revenue in 2020 and a loss of approximately $323 million. Wendel, Emerging Capital Partners, Mobile Telephone Networks, and Korea Investment Corporation back the firm.

- Informatica, a Redwood City, Calif.-based data software company, filed for an IPO. The company reported revenue of $1.3 billion in 2020 and a net loss of $168 million. CPP Investments and Permira back the firm.

- AvidXchange, a Charlotte, N.C.-based accounts payable software company, plans to raise up to $506 million in an offering of 22 million shares priced between $21 and $23 per share. The company posted $186 million in revenue in 2020 and a net loss of $101.2 million. Mastercard, Bain Capital Ventures, CDPQ, Temasek Holdings, and Capital Group back the firm.

- Pyxis Oncology, a Cambridge, Mass.-based cancer treatment company, plans to raise up to $133 million in an offering of 8 million shares priced between $14 and $16 per share. The company reported a loss of $12.8 million in 2020 and has yet to post revenue. Pfizer Ventures, BVF Partners, Perceptive Advisors, and RTW Investments back the firm.

- Arteris, a Campbell, Calif.-based on-chip communications company for semiconductor devices, filed for an initial public offering. The company reported $32 million in revenue in 2020 and a net loss of $3 million. Ventech backs the firm.

- Xilio Therapeutics, a Waltham, Mass.-based cancer treatment company, filed for an IPO. The company reported a net loss of $55 million in 2020 and has yet to generate revenue. Atlas Ventures, F-Prime Capital, Bain Capital Life Sciences, and Deerfield Management back the firm.

- Candela Medical, a Marlborough, Mass.-based aesthetic medical device solutions company, filed for an IPO. The company reported $322 million in revenue in 2020 and a net loss of $44 million. Funds managed by Apax Partners own the firm.

- LianBio, a Shanghai-based biotech, filed for an initial public offering in the U.S. The company reported a loss of $140 million and has yet to post revenue. Perceptive Advisors owns a majority stake in the firm. RA Capital and BridgeBio Pharma back the firm.

F+FS

- Thomas H. Lee Partners, a Boston-based private equity firm, closed Thomas H. Lee Equity Fund IX with $5.6 billion.

- Development Partners International, a London-based investment firm focused on Africa, is set to raise $900 million for its African Development Partners III Fund along with $250 million of dedicated co-investment capital. 

- Summit Partners, an alternative investment firm, closed Summit Partners Growth Equity Fund XI with $8.4 billion.

- Five Seasons Ventures, a Paris-based VC focused on food tech, closed Fund II with €180 million.

This is the web version of Term Sheet, a daily newsletter on the biggest deals and dealmakers. Sign up to get it delivered free to your inbox.