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Direct-to-consumer brand Misfits Market achieves unicorn status

Online food grocer raises $200 million in Series C round, bringing total investment to over $300 million

Misfits Market’s business has boomed as more consumers shift to online grocery shopping, and now it has achieved a valuation of over $1 billion following a new $200 million funding round. (Photo: Misfits Market)

Food waste in the United States is estimated between 30% and 40% of the total food supply, according to the U.S. Department of Agriculture (USDA). USDA’s Economic Research Service estimated the loss at 31% at the retail and consumer levels.

There are a number of reasons for food loss – from spoilage to production problems. At the retail level, overordering and the removal of blemished or less pristine product from store shelves leads to waste. Several startup companies are attempting to tackle this, and one has now reached unicorn status.

Misfits Market, a Delanco, New Jersey-based online grocer, announced a $200 million Series C funding round led by Accel and D1 Capital, bringing its total funding to $301 million to date. The latest funding values the firm at more than $1 billion – the traditional threshold for unicorn status.

“In 2020, Misfits Market found itself in the middle of a global sea change – the food supply chain experienced a once-in-a-100-year disruption, with major institutions and households changing the way they source and consume food,” said Abhi Ramesh, founder and CEO of Misfits Market. “With this capital infusion, we plan to complete our expansion to the West Coast and continue to expand the selection of organic produce and high-quality, sustainably sourced proteins and pantry items, getting us one step closer to our mission of making sustainable and affordable food accessible to every community across America.”

Misfits Market, which rescues typically unsellable food from farms, suppliers and retailers, and sells those products directly to the consumer at a savings of as much as 40%, saw its active customer base and order volume grow five times in 2020. The company shipped over 77 million pounds of food to more than 400,000 customers in 2020. In the first four months of 2021, it has already surpassed those totals.

“Direct-to-consumer models aren’t anything new in the food industry, but the approach Misfits Market has taken is,” said Ryan Sweeney, partner at Accel and a new board member of Misfits Market. “Instead of focusing only on their end customer, they’ve managed to create a dynamic solution that also supports food suppliers at every level.”

During 2020, Misfits Market tripled its farmer and supplier relationship.

A Brick Meets Click/Mercatus Grocery Shopping Survey found that online grocery sales in February totaled $8 billion, with the ship-to-home market reaching $1.8 billion. Online grocery shoppers’ average order volume increased 11%, the survey found. Misfits Market said 68% of grocery shoppers indicated they will continue to order online.

Misfits Market raised $85 million in a Series B fundraise in July 2020. Since then, it said it has expanded its grocery categories to include meats, poultry and seafood from sustainable producers of animal-based proteins raised without antibiotics or hormones; opened a 250,000-square-foot headquarters in Delanco, New Jersey, that allowed it to double its order capacity to states it serves in the eastern U.S.; and add 10 new states as it expanded its delivery days to up to seven days a week in some markets.  

The company is now expanding west, setting up a West Coast headquarters in Utah and building a regional facility with plans to bring more than 2,000 jobs to the area within the next five years. Expansion into the Pacific Northwest began on Wednesday when the company started taking orders in Oregon and Washington.

Click for more Modern Shipper articles by Brian Straight.

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Brian Straight

Brian Straight leads FreightWaves' Modern Shipper brand as Managing Editor. A journalism graduate of the University of Rhode Island, he has covered everything from a presidential election, to professional sports and Little League baseball, and for more than 10 years has covered trucking and logistics. Before joining FreightWaves, he was previously responsible for the editorial quality and production of Fleet Owner magazine and Brian lives in Connecticut with his wife and two kids and spends his time coaching his son’s baseball team, golfing with his daughter, and pursuing his never-ending quest to become a professional bowler. You can reach him at [email protected]