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The Spoon

Daily news and analysis about the food tech revolution

ugly produce

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.

‘Make Food Waste Less Possible’: How Businesses Can Help Consumers Fight Food Waste at Home

Tackling the food waste topic in a 30-minute panel is something of an impossible undertaking, given the size of the problem. That’s why at Day 2 of Smart Kitchen Summit 2020, myself, Apeel Sciences’ CEO James Rogers, Chiara Cecchini of the Future Food Institute, and Alexandria Coari of ReFED zeroed in on a few major causes and solutions around food waste.

One of those was the role of consumer behavior in the fight against food waste. Right now, according to ReFed, 80-plus percent of food waste in the U.S. happens at the consumer level, with more than 40 percent of that occurring in our own homes. But is it even realistic to expect consumers — for whom convenience and speed tend to be top priorities — to alter their behaviors around cooking, shopping, and eating in order to bring that number down?

Maybe. But as panelists explained during today’s talk, one of the keys to changing consumer behavior belongs not to the individual but to consumer-facing food businesses — the grocery stores, restaurants, and other retailers of the world.

Coari pointed out that these food businesses have a lot of influence up and down the value chain. Those businesses can enable consumer behavior change by making their environments, whether in the store or in the restaurant, less conducive to food waste to begin with. They can, as Coari said, “Make food waste less possible.”

Apeel, which makes a natural coating for produce to extend its shelf life, is one such example. Selling, say, avocados preserved in Apeel’s coating means consumers have more time between buying the product and eating it at home. Extending this lifespan, there’s a better chance the avocado will get eaten before it goes bad.

Neither the coating nor the extra several days of shelf-life happen because of anything a consumer does. They’re just buying the avocado. Instead, Apeel has used a technology and process that allow a consumer to get more mileage out of the food they buy.

Cecchini pointed out that educating consumers and helping them shift their perspective around certain foods is another important area of consumer behavior change. Take the so-called ugly produce: misshapen-yet-edible fruits and vegetables that are often sold at discounted prices. Cecchini suggests removing monikers like “ugly” or “imperfect” from the food waste vocabulary and trying to put a more positive spin on the concept to make it appeal to as many consumers as possible. In that way, grocery retailers, too, might not have to put as much effort into cosmetically perfect produce and wind up throwing out the rest.

There are tons of other examples of business innovation influencing food waste behavior at the consumer level. While we certainly didn’t cover all of them in the span of a half-hour, today’s talk certainly left me thinking about what food businesses can do to help us get more mileage out of the food we have and waste less of it in the process. As Rogers said at one point, “We can’t hope people [will] do the right thing. We have to make the right thing the easiest, cheapest, best for the planet thing to do.”

2050 Company Kickstarts Powdered Smoothies Made from Upcycled Produce

Ugly fruits and veggies can be pretty appealing (and delicious) when you grind them into dust. That’s the basic pitch for the 2050 Company, which launched its line of instant smoothies made from upcycled produce via Kickstarter today.

Sourced from farms and distributors across the West Coast, 2050 takes cosmetically imperfect fruits and vegetables and runs them through a proprietary drying process that removes the water but retains the nutrients in the items. The resulting dried produce is then ground into dust, which is packaged up and can be mixed with ice to make a smoothie.

2050 will start with three flavors: Rainier Berry, Seattle Summer, and Evergreen. A minimum pledge of $35 gets you 10-pack bag of smoothies with the first 350 backers getting Rainier Berry flavored smoothies in September and the rest being fulfilled in November.

Ugly produce has actually become quite the belle of the ball in recent years. In addition to it being turned into soups, sauces and ice creams, a number of startups are selling it outright. The aptly named Imperfect Foods (née Imperfect Produce) started off by selling surplus and ugly produce direct to consumers. Same goes for Misfits Market. And FoodMaven sells the ugly stuff to restaurants.

While we haven’t yet had a chance to try the 2050 smoothie, reducing ugly produce down to a powder is an intriguing idea. It’s lightweight, so it’s easy to ship, and will last on a shelf for up to one year.

Another company doing something similar is BlendJet, which sells a portable blender and packs of freeze-dried fruits for smoothies ($3.95 each).

2050 got its name because of its mission to improve the way we treat the planet before the environmental disasters (ice caps melting, rain forests gone, etc.) predicted to happen by the year 2050 arrive. We’ll see if that kind of foresight extends to its first year of business in 2020.

“Ugly” Produce Startup Full Harvest Reaps a $8.5 Million Series A

Today Full Harvest closed an $8.5 million Series A funding round led by Spark Capital with participation from Wireframe Ventures, Rent the Runway founder Jenny Fleiss, Cultivan Sandbox Ventures, and others.

The San Francisco-based startup, which was founded in 2015, is a business-to-business produce marketplace for cosmetically imperfect (or “ugly”) fruits and vegetables. They connect farmers with food and beverage companies which use produce to make blended and processed finished products, like juice, kombucha, or sauerkraut. That way, the aesthetics don’t come into play.

Founder and CEO Christine Moseley got the idea for Full Harvest while she was working at Organic Avenue, a cold-pressed juice company. “They were paying top dollar for perfect-looking produce that they were immediately processing,” she told me over the phone. Which meant that they had to charge a super-high price — $13 per juice — to make a profit.

A self-professed “longtime entrepreneur,” Moseley started looking for innovative ways to bring down the company’s food costs. The lightbulb moment came when she was visiting the largest romaine farm in the country and saw that they only harvested about 20% of their crop. The rest — heads of lettuce that didn’t meet grocery retailers’ aesthetic standards, and therefore couldn’t be sold — were turned back into the dirt to decompose. “That produce would have been perfect for the Organic Avenues of the world,” said Moseley.

So she decided to apply her business acumen to the agricultural industry and tackle post-harvest produce waste not as a sustainability problem (though it is), but as an economic one.

The first step: creating the technology to support a marketplace for the imperfect produce. Moseley likens Full Harvest to Airbnb: “Before Airbnb, you probably would never have thought to rent your room out for the weekend, since you’d have to coordinate all the logistics yourself,” she explained. “That’s where we’re at in the world of agriculture today.”

Currently, growers have to spend hours on the phone coordinating sales — and still, Moseley told me that almost 60% of them are on the brink of bankruptcy. Full Harvest opens up a new revenue stream for growers by connecting them with buyers who will buy produce that’s too ugly for the grocery store shelves at a cheaper price than the cosmetically perfect stuff. Farmers get more money, food companies get better deals on produce, which they pass on to the consumer.

Full Harvest markets themselves as the only B2B marketplace which covers the entire end-to-end sale of imperfectly formed produce.”You can view it as an Amazon-like experience,” said Moseley. “We don’t actually make or touch the product, but we coordinate logistics and make sure the product shows up on time as promised.” At the moment they’re still pretty far from Amazon-sized, though; they’re a managed marketplace, and each participating buyer and supplier is vetted before they can join.

They certainly came along at the right time: food waste is a hot-button issue, with startups cropping up to mitigate the staggering amount of food wasted throughout the supply chain. “I would say that it could not have been more perfect timing,” said Moseley. “We found a problem, and very shortly afterwards people became aware of it.”

Imperfect Produce is another startup capitalizing on the recent trend towards “ugly” fruits and vegetables. But while Imperfect facilitates the delivery of said produce from the growers to consumers’ doorsteps, Full Harvest focuses on the B2B side of things.

According to Moseley, so far Full Harvest’s efforts have increased profits for at least one farm partner by 12% per acre. The marketplace also saves their partner CPG companies 10-30% off their produce costs. To date, the startup has facilitated the sale of almost 7 million pounds of fruits and vegetables.

Which is still small potatoes in the overall fight against food waste. According to the Ugly Fruit and Veggie Campaign, 20-40% of all produce goes to waste because of strict grocery standards. That translates to about 20 billion pounds of food per year.

But now they have some serious capital behind them: this funding round will bring Full Harvest’s total money raised to $10.5 million. Moseley said that the company will use its new funds to scale up its tech platform, expand its market reach, and grow its team from 10 people to 30-40.

And this is just the start. “There’s a huge scalable business opportunity here,” said Moseley. The good news? The more this company scales, the more produce they save. I’ll cheers an ugly fruit-based kombucha to that.