Insight Partners leads $95m round at Imperfect Foods: ‘Their unit economics are exceptional’

22-Jan-2021 - Last updated on 22-Jan-2021 at 18:35 GMT

Imperfect Foods now has 350,000 customers signed up to receive weekly or bi-weekly boxes of groceries. Picture credit: Imperfect Foods

Grocery delivery firm Imperfect Foods has raised $95m in a Series D round led by Insight Partners and Norwest Venture Partners as it transitions from a regional delivery service focused on ‘ugly’ produce, to a national full-service grocer.

Founded in 2015 by Ben Simon and Ben Chesler with a mission to tackle food waste by delivering surplus or ‘ugly’ produce direct to consumers, San Francisco based Imperfect Foods now carries a wide range of pantry staples from brands such as Vital Farms to Chobani, and has developed a sizeable private label collection spanning everything from off-sized eggs and scarred almonds to coconut milk, tortilla chips, olive oil and chia seeds.

While fellow online grocer Thrive Market operates on a membership basis, with members paying an annual fee of $59.95 to get access to a curated selection of natural and organic brands at 25-50% below traditional retail prices, Imperfect Foods is an online subscription service. There is no membership fee, and users sign up to receive a weekly or bi-weekly box of produce and groceries, which they can customize.

Currently, it delivers to most of the West South Central region, the Midwest, Northeast and all along the West Coast from six fulfillment centers in Baltimore, Chicago, San Antonio, Los Angeles, San Francisco and Portland areas, with a delivery fee of $4.99 - $8.99, depending on the area, and a $30 - $45 cart minimum in some areas.

'Revenue run rate in excess of $500m'

Generating triple-digit growth in 2020 vs 2019, Imperfect now has 350,000 customers. It hasn’t shared a trailing 12-month figure, but says it “exited the year with a revenue run rate in excess of $500m.”

The latest cash injection - which follows a $72m series C round in May 2020 - will help Imperfect Foods to double its capacity and product assortment in existing facilities, accelerate its private label program, and improve the shopping experience, said Adam Berger, Insight Partners’ managing director and Imperfect Foods’ Lead Director.

“Insight has backed the global leaders in delivered meal kits, ready-to-eat meals, restaurant delivery and even pet meals, and Imperfect Foods is proving they are the leader in sustainable grocery delivery.

“Their unit economics are exceptional, driven by their unique ‘farm to fork logistics’ that curates customized produce and groceries, with scheduled weekly deliveries to the customer’s doorstep. Imperfect Foods’ supply chain is unmatched and quickly gets fresh groceries from producers to consumers with minimum intermediaries and waste, completing the last mile in their own vans.”