Misfits Market, the e-commerce platform that sells "ugly" produce (among other things), has today announced the close of an $85 million Series B financing round. The funding was led by Valor Equity Partners, with participation from Greenoaks Capital, Third Kind Venture Capital and Sound Ventures.
Misfits Market started as a subscription box that allowed folks to buy ugly or misshapen produce on the cheap each week. This produce would have been thrown out at the farm, before ever heading to a distributor or grocery store, because it usually goes to waste sitting on a grocery store shelf.
There's nothing actually wrong with this produce, except for the fact that shoppers wouldn't normally choose it from a pile of fruit or vegetables that look more pleasing.
Since raising its Series A, Misfits Market has been working to expand its selection, which now includes chocolate, snacks, chips, coffee, herbs, grains, lentils, sauces and spices. Users can add these products to their usual weekly produce box on an à la carte basis, and they're priced 20-25% below retail. These products are available to "add to box" once a week (on Thursdays).
At its core, Misfits Market looks at any structural inefficiencies in the food supply chain and capitalizes on them, getting the product at a discount and passing those savings on to the customer. These inefficiencies may include issues with sell-by date — some products must be on store shelves nine months before their sell by date — or an ineffectual mistake (like the olive oil company that works with Misfits Market and has a bad habit of attaching its labels upside down on the cans).
Where timing is concerned, Misifts Market doesn't have to play by the same rules as a distributor or grocery store, as it sends products directly to consumers, benefiting from a much faster logistical operation.
Alongside the funding announcement, Misfits Market is also announcing a new warehouse in Delanco, New Jersey that will allow the startup to double its capacity across the East Coast, the South and into the Midwest. This expands Misfits Market's delivery footprint to Arkansas, Mississippi and Louisiana, and the company has plans to launch in Wisconsin, Minnesota, Iowa and Michigan soon.
Image Credits: Misfits Market
Image Credits: Misfits Market
Obviously, the food industry doesn't want to be inefficient to the point of massive food waste. We've seen startups like Crisp look to solve these problems on the data science side. I asked Misfits Market founder and CEO Abhi Ramesh if improvements to supply chain efficiency and the continued growth of Misfits might create challenges ahead.
"Despite these technological advancements that are happening, the amount of product that goes to waste in absolute and relative terms is increasing every year," said Ramesh. "When you look at food waste over the past five years and compare that to the amount of food that went to waste in the prior five years, it's increased. It's one of those super long-term risks, but at least what we're seeing, and what the data is showing directionally around food waste, is that it's growing in magnitude, which means there will always be opportunities for us, or a version of us, to go in there and eliminate waste and provide affordability for customers."
A study by Boston Consulting Group expects food waste to increase in the next 10 years to 2.1 billion tons, worth $1.5 trillion, which represents a one-third increase in the next decade.
On the heels of the funding, Misfits will continue to build out the team, which has been growing rapidly in the midst of the pandemic. The company has hired 400 people since March, compared to 150 in the three-month period prior. The total team is 750 people, with an even split (51% male, 49% female) on gender. The executive team is 30% women and 20% racially diverse.
Misfits Market has raised a total of $101.5 million.