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Webvan raises $275M
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July 23, 1999: 11:35 a.m. ET
Fledgling Net grocer sells 6.4% stake to Softbank, Sequoia, Goldman Sachs
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NEW YORK (CNNfn) - Privately held online grocer Webvan, which began selling groceries over the Internet less than two months ago, said Friday it has sold a 6.4 percent stake in the company to prominent investors, including some aligned with Goldman Sachs, for $275 million.
That puts the value of the Foster City, Calif.-based company at about $4.3 billion, an eye-popping figure even by Internet standards, especially in light of the fact that Webvan has yet to go public.
And compared with traditional grocers, the number is astounding. Winn-Dixie Stores Inc. (WIN), the Wall Street Journal noted, operates more than 1,100 stores in 14 states and the Bahamas, and has a total stock market value of $6 billion.
The investors in Webvan's latest round of financing include previous investors Softbank Corp. of Japan and venture-capital firm Sequoia Capital. Investment partnerships connected with the Goldman Sachs Group Inc. also took part.
People familiar with the deal told the Journal that Softbank invested $125 million, the Goldman Sachs funds put up a total of $100 million and Sequoia kicked in $50 million.
The Journal also reported Goldman Sachs is working with Webvan on possible bond and stock offerings to be issued later in the year.
Footing the bill for expansion
To date, Webvan has raised a total of about $400 million and said it will use the $275 million to help fund its national expansion.
Less than a month ago, the online grocer placed a $1 billion order with Bechtel Group to build automated warehouses in 26 markets across the United States in what was one of the largest spending plans ever implemented by an Internet business.
Though it hasn't yet released any financial results, Webvan has made clear by its actions it intends not only to catch up with but to surpass its bigger, older rivals such as Peapod Inc. (PPOD).
To date, the company has signed up 20,000 customers, a much faster pace than most other online grocers, the Journal said.
"I hear things are going very well from the consumer side" one Silicon Valley venture capitalist told the paper. "Their value proposition is very sound. But the question is: At what cost are they making all of this happen?" 
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Webvan
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