Instacart’s $350M Acquisition of Caper AI

By Dillan Pindoria, Nishil Lakhani, Holly Bridges, Hassan Wahba, Bhav Rambhiya (University of Nottingham), Nathan Walemba (University of Oxford)


Overview of the deal

Acquirer: Instacart

Target: Caper AI

Total Transaction Size: $350 million

Closed date: 19/10/2021

Acquirer advisor:Baker McKenzie

Leading online grocery platform Instacart has announced that they will be acquiring the leading AI-powered shopping cart and checkout technology platform Caper AI for $350 million in stocks and cash.

Instacart will be looking to tap into expanding its rapid growth through cutting-edge technology provided by Caper AI, which will bring together a seamless in-store shopping experience with an existing excellent online grocery shopping service. Valued at $39 billion as of March 2020, Instacart is predicted to significantly increase this value, after rumors of an IPO have been released since its recent successes. In comparison, DoorDash, which could be considered one of Instacart’s main competitors, is valued at ~ $71 billion. They have also recently announced an acquisition of Wolt to get ahead similarly.

The driving force behind this acquisition will open up synergy opportunities for Instacart, after also recently acquiring Foodstorm, which offers catering technology to retailers. This boost of business for Instacart has been promoted through the prevalence of online grocery shopping due to national lockdowns and consumer fear stemming from the COVID-19 pandemic.

“We’re excited to bring Caper’s leading smart carts and smart checkout platform to more retailers around the world, as we all reimagine the future of grocery together.” - Fidji Simo, Instacart CEO

Company Details (Acquirer - Instacart)

Instacart, the world’s largest online grocery service, is a private American company founded in 2012. The company specializes in allowing American and Canadian consumers to order groceries from any of the 40,000 local grocers registered with Instacart to their homes via their website or mobile app. This business model has naturally captured the surge of demand for such services throughout the pandemic period. As shoppers return to physical stores, however, Instacart looks to establish a footing there through its acquisition of Caper AI.

Founded in 2012, headquartered in San Francisco, California

CEO: Fidji Simo

Number of employees: 10,000

2021 EV: $39bn

2020 Revenue: $1.5bn

2021 EV/Revenue: 26.0x

Company Details (Target - Caper AI)

Caper AI, founded in 2016, is a private retail software and artificial intelligence company that utilizes several technologies such as computer vision, machine learning and sensor fusion to automate the checkout at retailers, grocers and convenience stores. Based in New York, the company partnered with American retailer Kroger to launch ‘KroGro’ in 2020 which was first rolled out in Ohio but is making its way across the rest of the US.

Founded in 2016, headquartered in New york, USA

CEO: Lindon Gao

Number of employees: 63

Market Cap: N/A (private company)

EV: $350M

LTM Revenue: $10.2M

LTM EV/Revenue: 34x

Projections and Assumptions

Short-term consequences

Although some short-term consequences of the deal remain unclear, with Instacart yet to detail the integration of Caper Carts into their business model, the new enterprise service undeniably hits a new target audience.

It comes as no surprise that as we emerge from the grips of the COVID-19 pandemic, consumers are looking for a new hybrid shopping experience. Instacart’s acquisition of Caper AI and presumed implementation of carts into partner stores provides a gateway into the physical g