Sequoia and Andreessen get hosed on their 2021 Instacart investment, after a 75% plunge in valuation

Published

2 years ago

September 15, 2023

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Sequoia Capital and Andreessen Horowitz, two of Silicon Valley’s most high-profile venture firms, are poised to take a massive hit on their last investment in grocery delivery company Instacart, a deal that closed in 2021 as tech stocks were soaring.

In its latest IPO prospectus update, filed on Friday, Instacart said it plans to sell shares at $28 to $30 a piece, valuing the company at around $10 billion at the top of the range.

That’s more than 75% below where Sequoia and Andreessen invested in early 2021. At that time, Instacart sold shares at $125 a piece for a $39 billion valuation. The delivery economy was booming because of Covid shutdowns, and Instacart’s services were seeing record demand.

“This past year ushered in a new normal, changing the way people shop for groceries and goods,” Instacart finance chief Nick Giovanni said in a press release at the time.

In the more than two years since then, Instacart and its investors have learned that growth during that period was anything but normal. Instacart was closing out a quarter in which revenue surged 200%. In the quarter before, sales jumped almost sevenfold. Instacart said it was preparing to increase headcount by 50% and bolster investment in advertising.

Sequoia’s Mike Moritz, who led his firm’s investment and recently announced his departure after 38 years, said in the same press release that Instacart was “fulfilling its role as a vital service for consumers, a reliable partner for retailers and an effective platform for advertisers.” Fidelity, T. Rowe Price and D1 Capital Partners also participated in that financing round.

Then the economy reopened, inflation spiked and the Federal Reserved started boosting interest rates, which hovered near zero throughout Covid. Consumers started shopping again in person on tightened budgets, and with capital costs jumping, investors began demanding that cash-burning companies find a path to profitability. Last year, the Nasdaq suffered its steepest drop since the 2008 financial crisis.

It’s also true that venture firms haven’t seen any real returns from IPOs since before the 2022 market collapse. The dearth of exits is particularly stark because VCs invested records amounts of capital in 2020 and 2021, including deals at high valuations in areas like crypto and fintech.

Even with the changing market conditions, Instacart has continued to grow but at a dramatically slower pace. Revenue increased 15% in the latest quarter from the year prior, and operating expenses have come down over that time, allowing the company to turn profitable.

From a valuation perspective, the bigger issue is that Instacart raised the $39 billion round during a record stretch of tech IPOs, and just a couple of months after fellow sharing-economy companies Airbnb and DoorDash had blockbuster offerings.

There hasn’t been a notable venture-backed tech IPO in the U.S. since late 2021, and Instacart and Klaviyo are the only two that have publicly filed recently. Car-sharing service Turo is also on file, but its initial prospectus came out in early 2022.

Fortunately for Sequoia and Andreessen, they began investing in Instacart when the company was in its early days and the stock price was much lower than it is today. Assuming the stock price holds up, there’s still considerable money to be made for limited partners. Because of the lock-up period, the firms can’t begin selling shares until 180 days after the offering.

Sequoia is the largest investor in Instacart, with a 15% stake on a fully diluted basis. The 400,000 shares it purchased in 2021 are a small sliver of the 51.2 million shares it owns. In total, the firm has invested about $300 million for a stake that would be worth over $1.5 billion at the top of the range.

Sequoia led Instacart’s $8.5 million Series A round in 2013, when the price was just 24 cents a share, according to the prospectus. Andreessen led the next round at $2.98, and Sequoia participated. Both firms were in the Series C at $13.31 a share and the Series D at $18.52.

Because Andreessen’s total ownership is below 5%, its full stake isn’t disclosed in the prospectus.

Representatives from Sequoia and Andreessen declined to comment.

Not until 2020 did Instacart’s share price climb to around where it is today, in a $200 million round led by Valiant Peregrine Fund and D1. Neither Sequoia nor Andreessen participated in that round.

Even if Instacart’s IPO can’t lift its valuation anywhere near its Covid-era peak, it’s likely that Sequoia, Andreessen and other venture firms are hoping it helps lift public investor enthusiasm for new tech stocks. Arm, which was taken private by SoftBank in 2016, reentered the public market on Thursday and jumped 25% in its debut.

WATCH: Arm is IPOing profitably

Technology

Anthropic reportedly preparing for one of the largest IPOs ever in race with OpenAI: FT

Published

3 hours ago

December 3, 2025

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Anthropic reportedly preparing for one of the largest IPOs ever in race with OpenAI: FT

Nurphoto | Getty Images

Anthropic, the AI startup behind the popular Claude chatbot, is in early talks to launch one of the largest initial public offerings as early as next year, the Financial Times reported Wednesday.

For the potential IPO, Anthropic has engaged law firm Wilson Sonsini Goodrich & Rosati, which has previously worked on high-profile tech IPOs such as Google, LinkedIn and Lyft, the FT said, citing two sources familiar with the matter.

The start-up, led by chief executive Dario Amodei, was also pursuing a private funding round that could value it above $300 billion, including a $15 billion combined commitment from Microsoft and Nvidia, per the report.

It added that Anthropic has also discussed a potential IPO with major investment banks, but that sources characterized the discussions as preliminary and informal.

If true, the news could position Anthropic in a race to market with rival ChatGPT-maker OpenAI, which is also reportedly laying the groundwork for a public offering. The potential listings would also test investors’ appetite for loss-making AI startups amid growing fears of a so-called AI bubble.

However, an Anthropic spokesperson told the FT: “It’s fairly standard practice for companies operating at our scale and revenue level to effectively operate as if they are publicly traded companies,” adding that no decisions have been made on timing or whether to go public.

CNBC was unable to reach Anthropic and Wilson Sonsini, which has advised Anthropic for a few years, for comment.

According to one of the FT’s sources, Anthropic has been working through internal preparations for a potential listing, though details were not provided.

The FT report follows several notable changes at the company of late, including the hiring of former Airbnb executive Krishna Rao, who played a key role in the firm’s 2020 IPO.

CNBC also reported last month that Anthropic was recently valued to the range of $350 billion after receiving investments of up to $5 billion from Microsoft and $10 billion from Nvidia.

In its race to overtake OpenAI in the AI space, the startup has also been expanding aggressively, recently announcing a $50 billion AI infrastructure build-out with data centers in Texas and New York, and tripling its international workforce.

According to the FT report, investors in the company are enthusiastic about Anthropic’s potential IPO, which could see it “seize the initiative” from OpenAI.

While OpenAI has been rumoured to be considering an IPO, its chief financial officer recently said the company is not pursuing a near-term listing, even as it closed a $6.6 billion share sale at a $500 billion valuation in October.

Technology

We’re raising our CrowdStrike price target following a beat and raise quarter

Published

5 hours ago

December 3, 2025

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We're raising our CrowdStrike price target following a beat and raise quarter

Technology

Okta shares fall as company declines to give guidance for next fiscal year

Published

8 hours ago

December 2, 2025

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Okta shares fall as company declines to give guidance for next fiscal year

Cheng Xin | Getty Images

Okta on Tuesday topped Wall Street’s third-quarter estimates and issued an upbeat outlook, but shares fell as the company did not provide guidance for fiscal 2027.

Shares of the identity management provider fell more than 3% in after-hours trading on Tuesday.

Here’s how the company did versus LSEG estimates:

Earnings per share: 82 cents adjusted vs. 76 cents expected
Revenue: $742 million vs. $730 million expected

Compared to previous third-quarter reports, Okta refrained from offering preliminary guidance for the upcoming fiscal year. Finance chief Brett Tighe cited seasonality in the fourth quarter, and said providing guidance would require “some conservatism.”

Okta released a capability that allows businesses to build AI agents and automate tasks during the third quarter.

CEO Todd McKinnon told CNBC that upside from AI agents haven’t been fully baked into results and could exceed Okta’s core total addressable market over the next five years.

“It’s not in the results yet, but we’re investing, and we’re capitalizing on the opportunity like it will be a big part of the future,” he said in a Tuesday interview.

Revenues increased almost 12% from $665 million in the year-ago period. Net income increased 169% to $43 million, or 24 cents per share, from $16 million, or breakeven, a year ago. Subscription revenues grew 11% to $724 million, ahead of a $715 million estimate.

For the current quarter, the cybersecurity company expects revenues between $748 million and $750 million and adjusted earnings of 84 cents to 85 cents per share. Analysts forecast $738 million in revenues and EPS of 84 cents for the fourth quarter.

Returning performance obligations, or the company’s subscription backlog, rose 17% from a year ago to $4.29 billion and surpassed a $4.17 billion estimate from StreetAccount.

This year has been a blockbuster period for cybersecurity companies, with major acquisition deals from the likes of Palo Alto Networks and Google and a raft of new initial public offerings from the sector.

Okta shares have gained about 4% this year.

WATCH: Earnings will drive small cap outperformance, says Bank of America’s Jill Carey Hall