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Instacart Delivery Service Raises $8.5 Million

SAN FRANCISCO — Instacart, a seven-month-old service here that offers same-day delivery of groceries from multiple local stores, announced that it has partnered with Sequoia Capital and raised $8.5 million in Series A funding.

The round was led by Sequoia with additional participation from Khosla Ventures, Canaan Partners, SVAngel and Paul Buchheit, creator of Gmail. Michael Moritz, chairman of Sequoia and former Board member of Webvan, has joined the Instacart Board of Directors.

Instacart plans to use the proceeds of this round to fund expansion beyond the San Francisco area, with a goal of being in at least 10 major cities across the U.S. by the end of 2014. The service is currently available in San Francisco, Oakland, Berkeley, Mountain View, Palo Alto, Menlo Park and Sunnyvale, Calif.

Instacart's model relies on a crowdsourced labor force that shops for and delivers grocery orders using their own vehicles, with one-hour or two-hour delivery options. Instacart said it keeps track of the price, location and availability of thousands of individual grocery items in the local stores in which it shops, to help its personal shoppers be as efficient as possible and enable rapid delivery.

"We're really excited to be working with the Sequoia team, who bring extremely valuable and relevant experience to the table," said Apoorva Mehta, chief executive officer and founder of Instacart, in a statement. "Now that we have our San Francisco operation up and running and we have a great formula for success, it's time to turn our attention to national expansion."

Instacart said it plans to target other dense urban areas for its service, including New York, Chicago and Boston, where convenience is valued, many residents don't have cars, and the crowdsourcing model is already familiar and accepted.

Earlier this month, Instacart launched Instacart Plus, a new option that offers customers the lowest possible prices on national-brand grocery items.


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