Instacart Inc. does not plan to raise much capital in its IPO and instead expects most of the listing to come from the sale of employee stock, people familiar with its thinking said.

In meetings with potential investors in recent weeks, Instacart executives said they don’t plan to issue many new shares when they go public, the people said. Selling shares for most employees would allow Instacart staff, including some of its early hires, to finally cash out some of the shares they have accrued.

The move could help Instacart, which was founded in 2012, retain talent by giving employees more ways to benefit from their actions. Listed stocks could also make Instacart more attractive to new hires than startups who have decided to wait for a better market to sign up.

Instacart logo displayed on a smartphone with fruits in a market in the background. (Photo Illustration by Thiago Prudencio/SOPA Images/LightRocket via Getty Images/Getty Images)

INSTACART REVENUE GROWTH ACCELERATES AHEAD OF SCHEDULED IPO

The decision shows the pressure on some of Silicon Valley’s oldest startups to go public even as tech stocks plummet. Until recently, a large amount of investment available on the private market allowed startups to postpone public offerings if they wished, thus delaying payments to their employees.

Companies are still delaying listings because they fear they won’t get a good price in today’s market. Instacart is one of the few companies bucking the trend, and this summer was aiming for a Q4 listing.

The IPO market is heading for its worst year in decades, leaving some startups with few options but to spend from their cash reserves while they wait for the stock market to calm down. Instacart posted a net profit in the second quarter, which may explain why it is focusing its IPO on selling employee stock.

According to data from Instacart, some of the most popular Labor Day weekend grocery items include firewood, ribs, lobster tails, yellow corn and pork short ribs. (Instacart)

At the end of last year, hundreds of companies were preparing to register. Then high inflation, rising interest rates and Russia’s invasion of Ukraine drove prices down, drying up appetite for IPOs.

A SHOPPING EXPERT ON HOW CONSUMERS CAN FIGHT ‘SHRINKFLATION’ DESPITE RED RATES

Highly regarded startups like food delivery company Gopuff and online marketplace StockX LLC have delayed their listing plans. Payments provider Stripe Inc., founded in 2010 and last valued by investors at $95 billion, has yet to go public.

Listed companies similar to Instacart have seen their shares hit harder than most. Delivery companies DoorDash Inc. and Delivery Hero Inc. have each fallen more than 50% since the start of the year. Over the same period, the tech-heavy Nasdaq Composite Index fell less than 30%.

Instacart posted strong numbers in the second quarter despite rising inflation and increased competition. (Instacart)

Teleprinter Security Last To change To change %
DASH n / A n / A n / A n / A
DELHY DELIVERY HERO SE 4.218 -0.17 -3.92%

While Instacart will sell a small percentage of new shares, the bulk of its supply will come from employee shares that will be sold directly to new investors at an agreed price before the stock market debut. Listing details may change based on market conditions and other factors.

Instacart had previously leaned towards going public through a direct listing, The Wall Street Journal previously reported.

FTC Vows Crackdown on Companies That Profit from Gig Workers

In a direct listing, shares of a company simply begin trading on a given day. There is a reference price for the start of trading, but no shares are sold in advance at this price. Existing shareholders can sell their shares, but companies don’t raise money by going public.

Teleprinter Security Last To change To change %
UBER UBER TECHNOLOGIES INC. 31.49 -0.44 -1.38%

Instacart posted strong numbers in the second quarter despite rising inflation and increased competition from DoorDash and Uber Technologies Inc., which expanded their grocery delivery offerings. The San Francisco company turned a net profit and saw revenue rise 39% year-over-year in the three months to June.

GET FOX BUSINESS ON THE ROAD BY CLICKING HERE

Instacart said earlier this year that it has more than $1 billion in cash and marketable securities and last raised funds in March 2021.