While players in the wider (and crowded) food delivery space have been finding it difficult to secure funding, New York-based meal delivery startup, Freshly announced it has raised a $21 million Series B led by Insight Venture Partners. The round also included previous investors, Highland Capital Partners and White Star Capital.
In the recent past, investors were clamoring for a share of the food delivery market, but as is often the case after a near-frenzy, there follows a cooling of the collective sentiment. CB Insights concluded that in 2015 investors committed a total $445 million to meal kit startups reports Xconomy. However, in a recent report based on data since mid-May, CB Insights warns to expect a sharp drop off in funding for 2016 with commitment levels falling below those seen in 2014.
There have definitely been signs of a rationalization happening in the space with California-based SpoonRocket closing down in March of this year, Uber eliminating some services from its UberEats app in April, and India’s TinyOwl shutting down its services in all cities except Mumbai in May.
Freshly co-founder and CEO, Michael Wystrach confirmed an ongoing consolidation in the sector to Xconomy saying, “In the last six months there’s been some negative sentiment, around companies having a hard time getting financing,” but adds that Freshly’s latest successful round points to its solid position in the industry. “We think this is hopefully a counterbalance to some of the noise,” he says.
Founded in January 2015 by Michael Wystrach and Carter Comstock, Freshly allows customers to choose from a weekly menu of healthy meals that avoid gluten, refined sugar, and additives starting at $11 per meal. What sets Freshly apart however, is that their meals arrive fully cooked, able to be stored in the fridge for up to a week, and able to be heated up and ready within two minutes of prep time. Compared to other services, such as HelloFresh and BlueApron, Insight Venture’s Jeff Lieberman tells Forbes, “Fatigue in general in this market is when, if you try to make a non-cooker cook, they fatigue out.”
Through previous funding, Freshly has expanded its service from 10 to 28 states, and the company plans to deliver five million meals this year. With the support of this round, the company plans to expand its services to all regions of all 50 U.S. states, to expand its menu to include vegetarian and paleo options, and to increase its team as it enhances its technology.
“We’re excited about the integration of technology with food over time, when we start learning about you individually and learning foods you like or don’t like,” Wystrach told TechCrunch. “Then we can offer the other side of the quantified self.”
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Lynda Kiernan