The $4.3 billion (or more) online grocer is coming to Wall Street. On Friday, Webvan, the online grocer founded by Louis Borders of Border’s bookstore fame, announced that it had filed for a proposed initial public offering that could raise as much as $345 million.
Webvan currently only services the San Francisco Bay Area, and the company has committed about $1 billion to build distribution centers in 26 markets. Considering the cost of expansion and the value of its competitors, Webvan really seems overvalued. Last month, Webvan secured a $275 million round of funding from investors, including Goldman Sachs, Softbank and Sequoia Capital, that valued the online grocer at $4.3 billion.
By contrast, competitor Peapod, which already serves nine major markets, has a market value of less than $125 million. Webvan has a lot of smart money behind it, but there’s almost no way to justify its current valuation.