Less than a year after its $85 million Series B, North Philly-founded produce delivery startup Misfits Market has raised a huge round — a $200 million Series C it will use to expand with more grocery items and offer delivery to more places.
The round is led by Accel and D1 Capital, with participation by existing investors Valor Equity Partners, Greenoaks Capital, Sound Ventures and Third Kind Ventures. The company has raised $301.5 million to date. Its Series B last July was one of the region’s largest of the year.
The 2021 RealLIST Startups list topper, founded in 2018, saw an increased demand for its “ugly” produce and shelf-stable groceries like many other food delivery services amid the coronavirus pandemic, as consumers limited their trips to the grocery store. The company saw five times its growth in its active customers and order volume in 2020, and shipped more than 77 million pounds of food to more than 400,000 customers across the U.S., it said.
CEO Ahbi Ramesh told Technical.ly that he’d been talking with Accel and D1 for “some time” with the intention to stay connected when the company was ready for a Series C. Pitching an investor cold is a hard way to go about it, he advised.
“I think it’s important for any company to constantly be in touch with investors,” Ramesh said. “It’s a lot easier for investors to write checks if they already know about your business and that you’ve been executing for a while.”
Along with the fundraise, Accel Partner Ryan Sweeney will join Misfits Market’s board of directors, the company said.
“Direct-to-consumer models aren’t anything new in the food industry, but the approach Misfits Market has taken is,” Sweeney said in a statement. “Instead of focusing only on their end customer, they’ve managed to create a dynamic solution that also supports food suppliers at every level.”
The raise means that the company will be able to broaden its product offerings to include 20 different cuts of meats and seafood from sustainable producers, it said. Misfits Market maintains relationships with direct suppliers to cut down on costs.
“Underpinning this supply chain are systems that power the company to help us accomplish our mission,” Ramesh said. “We’ll continue to invest in logistics and fulfillment tech that allow us to operate at scale with assortment and SKU [stock keeping unit] count that’s growing every day.”
The company will also be able to double its order capacity to the 40 states in which it delivers, including a West Coast headquarters in Utah that will bring approximately 2,000 jobs to the region in the next five years, it said.
The company will also be adding thousands of jobs. Currently, Misfits employs about 1,000 people between its hubs in Pennsauken, New Jersey, and Utah, but it has plans to double that headcount by the end of 2021, Ramesh said.-30-