online grocery company
Misfits Market is acquiring Imperfect Foods in an all-stock deal, Misfits Market founder and CEO Abhi Ramesh told TechCrunch.
Both online grocery platforms, Misfits Market raised nearly $530 million since being founded in 2018, most recently a $200 million Series C round in 2021 that put its valuation at over $1 billion. Meanwhile, Imperfect Foods, founded in 2015 to rescue and redistribute goods, brought in a total of $229 million, including a $110 million Series D round last year.
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Though Ramesh declined to disclose the valuation of the deal, he did say that as combined online grocery platforms, it would accelerate Misfits Market toward $1 billion in sales and reach profitability in early 2024, something that would not necessarily be possible as two separate companies.
“Scale is what will drive long-term profitability in online grocery and unit economics efficiency,” he said. “Until probably close to a billion dollars in revenue, it is very hard for any online grocery company to be even close to profitable.”
Indeed, both companies have similar financial and cultural synergies, Ramesh said, including a focus on eliminating food waste. In the U.S. that affects between 30% and 40% of the food supply, driving up costs, according to the companies. They’ve estimated to have collectively “rescued nearly 500 million of pounds of food that may otherwise have gone to waste,” Imperfect Foods CEO Dan Park said in a statement.
This is Misfits Market’s first acquisition and is particularly fitting, given the online grocery environment over the past few years, Ramesh said. He has long believed that the food e-commerce and grocery commerce space was “ripe for consolidation” and saw a wave of it happen in 2020 and 2021; for example, HelloFresh acquiring both Factor75 and Youfoodz.
Having a strong balance sheet, the company saw a few deals come its way, but Ramesh said the company was not super interested in pursuing them. Then a few months ago, he was introduced to one of Imperfect Foods’ investors and discussed Imperfect going after a round of funding, but it was a challenging market for capital.
online grocery company