January 25, 2021

By Lynda Kiernan, Global AgInvesting Media 

Eight months after leading a $72 million Series C, Insight Partners has returned to lead a $95 million Series D for Imperfect Foods in support of the company’s goal of improving the food supply chain and reducing food waste.

Up to 40 percent of food produced, processed, and transported in the U.S. ends up never being eaten, according to Feeding America, and more food finds its way to landfills and incinerators than any other type of municipal solid waste. This loss represents a fiduciary hit of $218 billion to U.S. farmers, businesses, and consumers each year, according to ReFED, which also found that 20 billion pounds of food is lost at the farm level each year. Of this loss, the Natural Resource Defense Council estimates that between 10 and 30 percent is discarded due to its appearance.

Founded in 2015 under the name Imperfect Produce by Ben Simon and Ben Chesler, Imperfect Foods rebranded and adopted its current name in October 2019 to reflect its broader mission of having a positive effect on all food supply chains by delivering produce to consumers that was considered too ugly despite being perfectly serviceable. 

What began as a solution to the problem of farmers not being able to market up to a third of their crop due to the aesthetic requirements of retailers, Imperfect Foods soon realized that their mission could expand to address the need to recover other types of foods beyond fresh produce that perhaps don’t get the attention that the loss of fresh produce does.  

After four years of average triple-digit growth, and the establishment of a proprietary supply chain, Imperfect Foods has not only saved 139 million pounds of imperfect food, and donated a further 5.7 million pounds of food, but has expanded into grocery staples, dairy, meat, and seafood.

Then, in 2020, Imperfect Foods completed its evolution from a regional produce-focused platform to a nationwide full-service grocer with a catalog number in the hundreds of items. This work continued to take on new importance with the emergence of COVID-19, when the company began partnering with airlines to buy up allotments of first-class cheese plates, or began acquiring and packaging popcorn kernels from movie theaters that had seen business drop off.

“Imperfect is delivering a ‘mission with a margin’,” said Adam Berger, managing director, Insight Partners, and lead director, Imperfect Foods. “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.”

Berger continued, “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.”

This “farm-to-fork” business model and new way of addressing logistics within the food chain have become linchpin factors due to COVID-19.

Adam Bergman, managing director at EcoTech Capital, noted the critical point our food supply chains are facing in large part due to outdated infrastructure and processes, in his article, COVID-19 Exposes Paradox of Simultaneous Food Shortages and Food Waste, published by GAI News in April 2020, saying, “Any food wasted during normal times is unfortunate, but right now, with so many people faced with the prospect of being unable to afford to feed their family since unemployment has skyrocketed, it is more essential than ever to focus on establishing a more effective food production and distribution network.”

Over the course of its existence, Imperfect Foods has grown to be a leader in the mission-driven online grocery space with a subscriber base of more than 350,000 customers. And over the past year, the company has posted year-on-year growth in the triple digits, and closed the year with a revenue run rate exceeding $500 million. With the capital from this Series D, the company plans to double its capacity and product assortment in existing facilities; to accelerate its very successful private label program; to improve its customer experience; and to support the farmers and partners that make up the core of their business.

“This planned funding underscores the solid infrastructure, supply and customer experience upon which we’ve built this company,” said Philip Behn, CEO, Imperfect Foods.

“2020 proved there is a real and growing demand for the marriage of sustainability and convenience in retail food. As the leading direct-to-consumer online grocer with a coast-to-coast footprint and our own last-mile delivery fleet, we plan to continue improving the customer experience by doubling down on technology and building the ‘perfect imperfect assortment’ for our customers.”

– Lynda Kiernan is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, and HighQuest Group’s Oilseed & Grain News. She is also a contributor to the GAI Gazette. She can be reached at lkiernan@globalaginvesting.com.