Instacart (CART) has seen significant gains on its first day of public trading, kicking off its IPO date at $42. Geek Ventures Managing Partner Ihar Mahaniok — an early-stage angel investor for Instacart — joins Yahoo Finance Live to discuss the grocery delivery service's business model and the discourse surrounding IPO valuations.
"All of these partnerships are long term and they're built on relationships. but I think the fact [Instacart] knows how to work with gig workers is great," Mahaniok says on Instacart's gig worker focus. "For DoorDash and Uber and Uber Eats, it's all like their second or third business line, but for Instacart has always been perfecting specifically this model.
Video Transcript
- And so, Ihar, we should mention you were also an investor in this name. I just want to, I guess, clarify what you think Instacart's real moat is here. And just to go back to Akiko's point on competition, couldn't big retailers just say, listen, yes, grocery delivery is an interesting business, but couldn't they just do it themselves? Or if they want to work with a third party vendor, why does it have to be Instacart? I mean, what's special about Instacart? Is it the technology, Ihar? Is that what it is?
IHAR MAHANIOK: There are several things here, of course, in play. So the partnerships that they already have are a moat in some sense. So all of these partnerships are long term. And they are built on relationships. But I think the fact that they know how to work with gig workers is great. Of course, DoorDash and Uber Eats also know how to work with the gig workers. But it's also a focus.
So for DoorDash and Uber Eats, it's all their second or third business line. But for Instacart, has always been perfecting specifically this model. How can we deliver groceries from a store to home, as opposed to a restaurant delivery, as opposed to car services, in Uber case and so on. So I think that focus is really, really important.
- Ihar, given that you were an early investor in Instacart, I'm imagining you didn't actually invest in Instacart at the point of the $39 billion valuation at the peak. But number one, I wonder what that value of your investment stands right now, given where the public valuation is for this company, but also, what is the conversation that's happening among VCs in terms of these unicorns that are trying to test the market in this higher rate environment?
IHAR MAHANIOK: Of course, so since I came in the seed round very, very early right after YC, my investment is significantly up on this. And the fact that some entities and investors invest in 2021 doesn't change the game for early stage investors that ended up being positive on this IPO. What is important is this IPO is another signal to people who are thinking about investing in early stage, that investing in early stage has its merits. And it's really, really significant.
So while there are not, percentage-wise, few companies end up unicorns. Few companies end up creating outsized returns. But those that do can really, really make it up for the whole volume. So Instacart is obviously in several orders of magnitude stock price right now, compared to 10 years ago. And this is how we at Geek Ventures invest too.
So we invest in new Instacarts right now. We invest in companies which have either early pre-revenue idea or they have early revenue with the plan that we only look for founders and companies that can be IPO'd or multibillion dollar exit in about 5, 7, 10 years from now. And I also want to add that this particular IPO will add liquidity into the system to actually restart this flywheel of VC again.
