Misfits Market, a two-year-old startup taking on food waste with “ugly” produce, announced Wednesday it closed on an $85 million Series B financing round led by Valor Equity. This comes just one year after the company announced another $16.5 million investment, bringing its total funding raised to $101.5 million.
The company offers a subscription service that ships misshapen — but perfectly tasty, organic, non-GMO — produce to users’ doors either weekly or bi-weekly. This is food that would have otherwise been thrown out at the farm even before it hit grocery store shelves. Right now, customers cannot customize what produce comes in their box, but the company plans to implement a feature that will allow for that by this fall.
Misfits Market is also partnering with companies like Taza Chocolate, Bob’s Red Mill and Ceremony Coffee to provide more shelf-stable products to its users, which can be purchased a la carte at a fraction of their retail price.
The end goal of Misfits Market is to take advantage of the food supply chain’s structural inefficiencies, getting its products at a discount and passing those savings on to customers while reducing food waste.
“While reducing food waste is a key aspect of Misfits Market’s mission, we’re equally dedicated to providing convenient, affordable access to fresh, quality food,” founder and CEO Abhi Ramesh told Built In via email. “Additionally, Misfits Market works to ensure that, when it expands to states, all zip codes are served, not just urban areas.”
This isn’t the only company on a mission like this, and it certainly isn’t the only one getting investors’ attention. Imperfect Food, a San Francisco startup with a similar business model to Misfits Market, raised $72 million in May. Other startups have received funding to solve the $700 billion problem of food waste with everything from new storage techniques to a platform that predicts demand.
While the COVID-19 pandemic and the rapid shift in consumer spending that came with it brought a renewed interest to this industry, Ramesh this kind of grocery delivery service isn’t going away any time soon.
“COVID-19 has certainly underscored how vital our service is for millions of Americans. This was just the tipping point; approximately 40 percent of people who ordered groceries online during the pandemic have never done so before,” Ramesh said. “Grocery delivery is much more than a trend, but instead a natural evolution of how customers are prioritizing convenience and affordability.”
In fact, Misfits Market claims consumer demand has grown by 400 percent just the last three months. To keep up, it has hired about 400 new employees since March and Ramesh says the plan is to double its headcount across all locations in the next year. The company is headquartered in Philadelphia, has a second office in Brooklyn and distributes its produce to 26 states and Washington, D.C.
This latest funding will also be used to build a new warehouse in New Jersey, which will allow Misfits Market to more than double its order capacity across the East Coast and enter more Southern and Midwestern markets, including Mississippi, Wisconsin, Arkansas and Michigan.