Instacart just closed on $200 million funding, but is it enough to stave off Amazon?

Instacart says its latest $200 million funding round is more than enough to race into new markets, boost its hiring plans and test out new services. But is it enough to fend off Amazon's encroaching presence in the grocery industry? The San Francisco-based delivery startup closed on its latest round earlier this week, boosting its valuation to $4.2 billion, up from a $3.4 billion valuation when it roped in $400 million last March. Returning investor Coatue Management led the Series E round. Instacart has raised almost $1 billion in total funding to date. But a lot has changed in that nearly 12-month period. Most notable: Online behemoth Amazon (NASDAQ: AMZN) purchased Whole Foods Market for $13.7 billion, and quickly leveraged its new buy to gain a stronger foothold in the already-crowded grocery industry. Interestingly, Whole Foods still maintains a minority stake in Instacart. Neither Amazon nor Instacart would comment on what that existing stake could mean for either company's strategy. It last invested in the delivery startup in March 2016. Most recently, Amazon rolled out plans to deliver groceries from Whole Foods in less than two hours for its Prime Now customers. Amazon plans to expand the service throughout the United States this year. While the impending threat of Amazon's reach has plenty of others concerned, Instacart's CFO Ravi Gupta said the company isn't fazed by the grocery industry's tumultuousness or increasing uncertainty. Rather, the company is piecing together plans to ramp up business in it. With $200 million in its pocket, Gupta said the startup's goal is to serve 80 million households across North America and cover about 80 percent of the United States by the end of the year. Currently, it serves 70 million households and stretches over about 65 percent of the U.S. "We know our model works. The nice thing about it is it doesn't require capital to move into a new market, since we don't buy trucks and we don't buy warehouses. It scales well, and since everybody needs to eat, a grocery stores is always within about 15 minutes of where we go," Gupta said. Plans to add more territories under its belt and expand in ones it is already in will run alongside Instacart's increased hiring strategy. Gupta said it will double the number of people on its tech team — it currently has about 100 based in its San Francisco office — as well as add more to its engineering, product and data sciences departments. Instacart said it has approximately 400 employees at its Bay Area headquarters. Pitchbook estimates it employees about 700 people total. "We want to experiment with different ideas that will help us offer more convenience, pricing and selection," Gupta said of investing the $200 million in staying competitive. "By investing in the team, and building out our tech team in particular, those are the people that will help us work on those things." As for Whole Foods, Gupta and the rest of the company have been adamant that Amazon's new ownership hasn't impacted Instacart's ability to continue to grow. In the immediate aftermath of the acquisition last summer, grocery analysts such as Phil Lempert told the San Francisco Business Times that the biggest loser in the deal was Instacart. "The game has been changed substantially, and it's going to be tough on Safeway and Kroger (NYSE: KR), especially if Amazon lowers prices," Lempert previously said of the already low-margin business. "It's the beginning of a lot of changes taking place as it relates to prices, assortment, store size, delivery.... Frankly, it's Instacart that is going to lose the most." He even toyed with the idea of Amazon buying the delivery startup, but ultimately said it was likely too expensive for the online retailer to acquire. Regardless of analysts' mounting concerns, Gupta said Whole Foods is just 1.7 percent of the grocery market. Instacart already partners with seven of the eight largest grocers in the industry, with Wal-Mart (NYSE: WMT) as the only one left standing. Gupta declined to comment on whether Instacart was chasing any potential deals with the retailer, saying the startup "doesn't comment on future or prospective partnerships." 100 Fastest-Growing Private Companies in the Bay Area Ranked by Percent growth 2014-2016 Business name Percent growth 2014-2016 Gainsight 1,484.8% Skillz Inc. 1,236.4% GameChangerSF 1,037.5% View This List