FT-AIR Insight: IPO Market Thaw Is Welcome Sight for VC’s

Online grocery firm Instacart (CART) is gearing up for its IPO, seeking up to a $9.3 billion valuation that sets an offer price of between $26 and $28 per-share.

The debut will put the IPO market to the test after a 2-year-long freeze on stock market listings.

As a firm, we substantially invest our internal partnership capital in high-growth private companies, many of which our co-investment partner RIAs and Family Office clients have participated in alongside us.

We have long known and admired Instacart as a company, its founders and certain of its key personnel. Historically, its financing rounds have always been extremely expensive, and we have preferred to invest in other private companies across the U.S. and international markets. As a result, we do not have any exposure to CART.

Given our experience in the pre-IPO category, here’s the playbook for how this always goes. The talking heads will shout, “Good price!”. And then they will scream, “Bad price!”. However, the straight-talking reality is that any IPO is a price discovery process.

So please ignore that banter [for now]. Keep in mind that the book-running process regularly gets the valuation math wrong at IPO. That can range from +/- 30/30% for traditional IPOs. And the SPAC market probably gets it wrong +/- 90/90%.

All that matters is where the market chooses to value these businesses once they float. And no one has clear insight into that for CART at this exact moment. Anything more definitive is just someone making up numbers, to a degree.

We hope our investors appreciate the candor and will be watching this IPO closely from the sidelines.