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Daily news and analysis about the food tech revolution

Misfits Market

The Week in Food Tech Funding: Double (Alt) Cheese Funding & Big Money for Misfits

Fall is upon us in the Pacific Northwest, and alongside autumn colors and windy weather is lots and lots of food tech venture capital. This week’s funding news includes not one but two alt-mozzarella startups, a monster round for ugly produce online retailer Misfits Market, and three pieces of food robot funding news.

On to it:

Plant-Based Food

Sophie’s Kitchen – $5.6 Million: Sophie’s Kitchen has raised $5.6 million to fund the growth of its plant-based seafood lineup of products. The company, founded in 2010, offers a line of alt-seafood products, including crab cakes, shrimp, salmon, and tuna. Billy Goat Brands led the round, a Canadian venture fund focused on sustainability. Sophie’s Kitchen products can currently be found at Walmart, Sprouts, and Wegmans. The funding continues the momentum for the plant-based seafood category, which saw $116 million in funding in the first half of 2021 (compared to $26 million for the whole of 2020).

Growthwell – $22 Million: Singapore-based plant-based seafood and chicken maker Growthwell has raised a $22 million Series A led by Creadev. The company, which raised $8 million last year, “owns a portfolio of alternative protein companies aimed at Southeast Asian consumers, including OKK (plant-based meat), Su Xian Zi (vegan mutton), and gomama (ready to eat dishes made from plants).” They also sell a chickpea protein powder called ChickP for use in meat and dairy alternatives.

NUMU Food Group: Plant-based cheese startup NUMU has raised early in September. The amount of the funding was undisclosed. The company makes plant-based mozzarella from potato starch, soybeans, and coconut oil. Started a former DJ named Gunars Elmuts, NUMU sells its cheese to food service providers in shreds and blocks.

Precision Fermentation

Formo – $50 Million: Berlin-based Formo announced it had raised $50 million in Series A funding. The investment in the maker of animal-free cheese was led by EQT Ventures, with Elevat3 Capital and Lowercarbon Capital. Formo uses a precision fermentation process to make animal-free dairy cheese with animal identical proteins. The company plans to use the funding to “With the resulting increase in R&D capacity, Formo intends to expand its product portfolio to represent a wide variety of European dairy specialties such as mozzarella and ricotta, with techniques designed in collaboration with artisan cheesemakers.“

Food Robots

Pudu Robotics – $78 Million: China-based Pudu Robotics announced this week it had raised a $78 million C2 found of financing, matching the same dollar amount for its May C1 funding round. In total, the company has raised $156 million in Series C financing. The company makes a few different types of bots, including a front-of-house bot called the Bellabot, a cleaning bot, and two models of delivery bots.

Keenon Robotics – $200 Million: Another China-based robotics startup Keenon Robotics has raised an impressive round with its $200 million Series D. Its round was led by Softbank. Like Pudu Robotics, Keenon also makes food delivery and front-of-house food service bots and robots for hospitals.

Daxbot – $211 Thousand Crowdfunding: This week, Daxbot, a maker of sidewalk food delivery robots, launched its equity crowdfunding raise. Like many food robot startups, Daxbot is using StartEngine for its raise, and the company has already (as of this writing) raised $211 thousand from 136 investors. Today the company’s robots are being used for food delivery in Philomath, Oregon.

Online Grocery

Misfits Market – $225M Series C-1: Online grocer Misfits Market announced it had raised almost a quarter billion in new funding via a Series C-1 round. It’s a quick turnaround for more capital for the sustainability-focused online grocer that works with farmers and food producers to save ugly produce and food that otherwise would go into the compost bin; the company raised a $200 million Series C in April. Misfits Market joins fellow ugly food retailer Imperfect Foods as one of the companies that have tapped investor interest in the food waste space.

Smart Vending

Foodles – €31 million: Smart corporate food vending/catering startup Foodles has raised a €31 million Series B round from InfraVia Growth and Bpifrance via its Large Venture fund, and follow on rounds from existing investors, Creadev, DN Capital, and Adelie. The French company offers connected fridges, which it calls canteens that it supplies with food. According to the company, each fridge can provide food to up to 59 employees. The company hopes to disrupt a European contract catering market worth 240 billion euros.

Food Supply Chain Software

Grubmarket – $120 Million: Grubmarket, a provider of software and services to enable food producers, has raised a $120 million Series E round. The company’s software enables food producers and distributors to manage inventory, pricing, customer relations, and other company-related operations. The company’s announced hinted in the announcement that they will likely expand from just software into robotics in the future: “GrubMarket will likely also start to explore connected hardware to help those customers, too: robotics for picking and moving items” related to those activities managed by its supply chain oriented software.

Restaurant Tech

SpotOn – $300 Million: Payments software startup SpotOn announced this week it has raised a $300 million Series E to help finance the acquisition of Appetize, a mobile and digital payments startup focused on sports and entertainment venues, amusement parks, and zoos. Mega-VC Andreessen Horowitz led the deal (as they did SpotOn’s last round). A16z’s eagerness to inject more capital into SpotOn probably has a lot to do with the company’s tripling of revenue over the past 18 months. SpotOn, which has traditionally focused on SMBs (the segment of the restaurant space that has been the most aggressive in modernizing its tech stack during the pandemic), will now be able to sell into the enterprise market with the newly acquired Appetize.

Misfits Market Expands Availability to Four More States

Misfits Market, the online grocer that specializes in rescuing food products that might otherwise be thrown out, announced the geographic expansion of its services to four more states today. Misfits now delivers to Arizona, Nebraska, New Mexico and Oklahoma, bringing its total coverage area to 43 states plus the District of Columbia.

Founded in 2018, Misfits Market works with farms, distributors and even airlines to source a sell perfectly good food that would otherwise go to waste, at a discount. The company started selling imperfect or “ugly” produce, and has steadily expanded into other categories like pantry and packaged goods. For packaged goods, for example, if a production run of olive oil wound up printed with upside down labels, Misfits sells those bottles rather than having them be discarded. When the pandemic hit last year and flights were shut down, Misfits was able to obtain and sell things like the cheese plates airlines would have had to throw out.

Earlier this year Misfits raised a $200 million Series C round of funding and added proteins to its offerings. Like with other categories, Misfits finds places in the supply chain where there is excess or waste. In the case of meats, there are often whole cuts that aren’t in “season” during a particular time of year, or trimmings that typically get discarded that the company rescues.

Mail order groceries have had a pretty banner year when it comes to funding. Fellow rescued food service, Imperfect Foods raised $110 million, and Weee!, an online grocer specializing in Asian and Hispanic Foods raised $315 million. Part of what drove all this investment interest in online grocers is, of course, the pandemic, which pushed people into e-commerce last year.

The bigger question surrounding ship-to-home grocers like Misfits and Imperfect is whether customers will stick around with the less convenient mail order delivery as the pandemic (eventually) recedes. Survey data from Brick Meets Click shows that online grocery shopping has declined in recent months, with most of the drop occurring in the mail-delivered category.

Misfits, however, said it continues to grow. During a video chat last week, Vice President, Growth & Analytics at Misfits Market, Kelly-Marie Bermudez, told me that the company is experience 5x growth in both active customers and order volume. Additionally, Bermudez said that Misfits rescued more than 170 million pounds of food in 2020, and has already exceeded that figure in the first half of 2021.

Misfits Market Raises $200M Series C, Will Expand into Proteins

Misfits Market, an online marketplace that sells imperfect foods at a discount, announced today that it has raised a $200 million Series C round of funding. According to a press release shared with The Spoon, the round was co-led by Accel and D1 Capital, with participation by existing investors including Valor Equity Partners, Greenoaks Capital, Sound Ventures, and Third Kind Ventures. This brings the total amount raised by Misfits to $301.5 million.

Misfits Market started out selling subscriptions to boxes of “ugly” produce back in 2018. This allowed customers to buy misshapen but perfectly edible fruits and vegetables at a discount while rescuing food from going to waste. Since then, Misfits has expanded to offer a wide range of other imperfect pantry and packaged items that might otherwise be discarded. These include products with misprinted labels and products that are shipped to the wrong location.

The global pandemic actually created a number of new opportunities for Misftits Market last year. With stadiums, schools, restaurants and more shut down, existing supply chains needed to re-direct their products to new customers. For example, with movie theaters closed, there was a glut of corn for popcorn that Misfits could purchase and sell at a discount to its customers.

Additionally, Misfits has benefited from the pandemic-induced boom in online grocery shopping as customers limited their trips to physical stores. Abhi Ramesh, Founder & CEO of Misfits Market told me by phone last week that his company grew 5x in scale last year.

With its new funding, Ramesh is hitting the gas to accelerate Misfits’ growth. The company opened a new 250,000 sq. ft. headquarters in New Jersey and was able to double its order capacity. And while Misfits is predominantly available in the Eastern U.S. right now, it will be expanding to the West Coast with a new facility in Utah. One in the Pacific Northwest will follow after that.

Misfits is also expanding its grocery categories with the addition of protein. Most customers might blanche at the thought of “imperfect meat,” but Ramesh explained to me that there is a lot of excess in the protein supply chain as well. With something like salmon, for instance, there are often 3 oz portions leftover from trimming fillets. Misfits can bundle those leftovers and sell them at a discount.

Misfits Market’s funding is also coming during a time of big investment in grocery related startups that are aiming to upend our traditional notions of food retail. A number of smaller, delivery-only grocery stores like Fridge no More and Gorillas are popping up around the world, making groceries something more akin to a utility. Online grocer Weee! is leading the way by focusing on selling Asian and Hispanic foods. And retail infrastructure startups like Shelf Engine and Trax are developing tech to re-invent how store inventory is managed.

Most relevant to Misfits, however, is its main rival, Imperfect Foods, which has also expanded from ugly produce to become more of a full online grocer that taps into existing supply chain deficiencies. Imperfect raised a $110 million Series D round in February, which means we can probably expect a marketing blitz from both companies this year.

The question over both Misfits and Imperfect at this point however is what happens post-pandemic? Will people still want to order groceries online when they can just go to their local store? Ramesh said he isn’t too concerned about that. “Yes, there will be some sort of reversion to the mean,” Ramesh told me. But because his company is offering discounts and value on products people already buy, his customers will continue to shop with Misfits.

A Designer From Spain Has Turned Food Waste Into a Skincare Line

Redistributing cosmetically imperfect produce via grocery and restaurant services is one way to keep food out of landfills. Turning those cosmetically imperfect fruits and veggies into actual cosmetics is another method, and one Spanish designer Júlia Roca Vera is taking with her Lleig skincare line.

Dezeen, a website covering all things design, profiled the process Vera used to make four different skincare products from a single piece of fruit, in this case an orange that was discarded because it was cosmetically unacceptable by supermarket standards. From that orange, Vera, who is currently a design and engineering student, created moisturizer, a soap, a potpourri, and a juice for drinking.

Lleig (Catalan for “ugly”) is as much a conceptual design project as it is a skincare line, with products coming in reusable clay containers and the suggestion to complete certain rituals during the skincare process. Vera worked with Espigoladors, a social enterprise that “rescues” cosmetically imperfect produce, to source the food used for the project. While she focused on an orange, she told Dezeen that her process would also work will apples, bananas, carrots, and other fruits and vegetables.

There’s no way to purchase Lleig right now, as it’s more design statement than scalable product at the moment. The larger point of the project is to raise awareness about why we throw certain foods away as well as what can be done with those items instead of tossing them in the landfill. Vera told Dezeen that she “hopes to encourage a holistic approach to beauty that prioritises health and wellbeing over external appearance.” That goes for humans and produce items alike. 

In the U.S., rescuing cosmetically “unfit” produce is still a fairly new area of the food industry, with its main players companies like Misfits Market and Imperfect Foods that sell this rescued food as discounted groceries. Whether skincare made from food waste every becomes a scalable notion remains to be seen. However, the idea does give us one more reason to keep food out of the landfill.

Surplus Food Startup Hungry Harvest Closes Series A Round at $13.7M

Food rescue startup Hungry Harvest has closed its Series A round at $13.7 million, according to a company press release. The round was led by Creadev with participation from Danone Manifesto Ventures, Quadia, and Maywic Select Investments.

Hungry Harvest is one of several companies out there rescuing “ugly” produce and other staples from groceries in an effort to curb food waste and redistribute food to those in need. The company collects fruits, vegetables, and other items deemed cosmetically unfit for mainstream retailers and packs them into variety boxes customers can order and have delivered to their doorsteps. Users can customize their boxes based on how often they cook, how many people they are feeding, and whether they prefer organic produce or will eat anything. Boxes range in price from $15 for a “Mini Harvest” all the way up to $42 for a “Super Organic Harvest.”

The company also donates to local organizations fighting food insecurity in the U.S. Hungry Harvest says it plans to use the new funds to improve the customer experience for its products and scale its social mission of getting affordable food to those in need. 

The concept of rescuing ugly produce from landfills has steadily grown in popularity over the last couple years as the world’s multibillion-dollar food waste problem becomes more top of mind for more consumers. Those consumers now have ample options when it comes to purchasing cheaper produce that would get tossed at a grocery store, including Karma, Imperfect Produce, and Misfits Market. Some of these companies are actually partnering with grocery stores, as Flashfood is doing with Meijer stores in Detroit. 

For it’s part, Hungry Harvest currently delivers to Baltimore, D.C., Philadelphia, Charlotte, Raleigh, Miami and Detroit.

The Food Tech Show: Ghost Kitchens, $1 Keto Cookies & the Magical Egg Cooker

The Spoon editors got together to talk about some of the most interesting food tech news of the past week (as well as complain about high-priced cookies).

Some of the stories we talk about on the pod include:

As always, you can listen to The Food Tech Show in Apple Podcasts, Spotify or wherever you get your podcasts. You can also download the show direct to your device or just click play below.

Misfits Market Raises $85M Series B for its Online Oddball Food Marketplace

Online grocery subscription service Misfits Market announced today that it has raised an $85 million Series B round of funding. The round was led by Valor Equity Partners with participation from Greenoaks Capital, Third Kind Venture Capital, and Sound Ventures. This brings the total amount of funding raised by Misfits to $101.5 million.

Founded in 2018, Misfits Market started out selling imperfect or “ugly” produce boxes via subscription. The company has since expanded into other categories. It now sells all manner of packaged food considered imperfect because of things like inventory trucks being sent to the wrong location or labels printed backwards on items.

You may think that you can’t build a business on misprints, but as Abhi Ramesh, Founder & CEO of Misfits Market explained to me phone last week, you’d be wrong.

“There are a ton of manufacturing errors,” Ramesh said, “We purchased 50,000 units of olive oil because [the] label was printed backwards. Things like that happen constantly in the food system — manufacturing errors, mislabels, short coded items.”

Misfits claims that customers who buy these imperfect items save an average of 25 – 50 percent of retail prices. The catch however is that these imperfections are not consistent. That particular brand of olive oil isn’t going to misprint labels every month. Ramesh told me that while there may not be brand consistency, there are enough manufacturing issues across the industry that his market can still offer olive oil, it will just be a different brand from month to month.

Like so many other grocery related businesses during the COVID pandemic, Misfits Market has seen a surge in usage. According to today’s press announcement, the company has seen a 400 percent spike in consumer demand and has made 400 new hires since March.

Misfits Market isn’t the only company in the ugly food game. Imperfect Foods and Hungry Harvest do much the same thing.

Right now, Misfits Market only delivers to zip codes across the eastern half of the U.S. Consumers sign up for the service by choosing one of two different box sizes for produce, with the smaller one costing $22 and the larger going for $35. From there, they can access the other imperfect items in the marketplace. Ramesh said that eventually, Misfits Market will become more like Costco, where you pay a monthly membership that gives you access to the full store.

With $85 million now in the bank and a bigger customer base, they’ll be able to buy up even more misprinted product misfits.

“Ugly” Produce Subscription Service Misfits Market Raises $16.5M

Today Misfits Market, the New York-based company that sells subscription boxes of irregularly-shaped produce, announced that it had raised a $16.5 million Series A funding round (h/t Techcrunch). Greenoaks Capital led the round.

Founded in 2018, Misfits Market sources produce from farms that can’t be sold to grocery stores for some reason: be it because of imperfect shapes, sizing, or just a surplus. Consumers can choose from two box sizes — the smaller The Mischief (10-12 pounds weekly for $23.75, $20 with subscription) or The Madness (18-20 pounds for $42.50, $34 with subscription). The startup currently ships to 11 states. Today it announced expansion plans to move into 8 more, covering most of the East Coast.

So-called “ugly” produce is having a moment. In addition to Misfits Market, companies like Imperfect Produce and Hungry Harvest also sell cosmetically imperfect and surplus produce through subscription boxes at a reduced cost, while Full Harvest serves the B2B side.

Unlike Imperfect Produce, however, Misfits customers can’t choose what’s in their box — it’s based on whatever the company sources from their farm partners that week. While that could be fun for the adventurous eater, it could also result in more home food waste if, say, you receive a ton of parsnips and are a parsnip hater, or simply don’t know how to cook them. Misfits hopes to introduce a customization feature down the road.

The ugly produce movement has also spurred some serious backlash. Crop scientist Sarah Taber wrote a viral Twitter thread which claimed that the food system is actually really good at using irregular and surplus produce, which often ends up going to underprivileged communities or turned into blended foods like salsa. However, that can depend on the size of the farm — smaller producers can have a trickier time finding people to take their misshapen or surplus foods.

That is where Misfits Market can help. Unlike Imperfect Produce and Hungry Harvest, Misfits Market exclusively targets local producers, giving them a platform to sell their goods that they might not normally have had. Misfits market is also trying to democratize who has access to fresh, organic food: the company ships to every zip code in the states in which it operates, not just the wealthier urban ones.

Despite disagreements over how to tackle it, there’s no debating that food waste is an overwhelming problem. And Misfit Market’s $16.5 million funding round shows that investors realize it’s also a juicy opportunity.