Around 30 to 40 percent of the American food supply goes to waste, according to the U.S. Department of Agriculture. The Natural Resources Defense Council also estimates that food waste is responsible for 2.6 percent of the country’s emissions of greenhouse gases. Misfits Market and Imperfect Foods have become two of the biggest names in addressing this crisis by selling foods that would otherwise be thrown away. Plus, both are taking advantage of an exploding industry: the market for online groceries is expected to be worth $187.7 billion by 2024, compared to $95.8 billion two years ago. Soon, however, there will be no “both”: on September 7, Misfits Market announced that it would acquire Imperfect Foods in an all-stock transaction.
Although the deal’s valuation remains under wraps, the combination is expected to propel the united company to $1 billion in revenue and to become profitable by 2024. This is a big deal: in a landscape dominated by big players and a leveling off of sales, Misfits Market CEO Abhi Ramesh explained to Forbes, “I really couldn’t name a standalone profitable online grocery company today. So I’d argue that we’d be one of the first, if not the first, to achieve that.” After that, he imagines going public will be within reach, as he told TechCrunch. “That would be the next immediate step for us. When we are profitable, we can take on all of these massive incumbents.”
It is important to note that both companies have been doing quite well on their own. Misfits Market has a valuation of about $2 billion after raising $225 billion in a Series C-1 financing round last September, with $526.5 million fundraised in total since its founding in 2018. Meanwhile, last January, Imperfect Foods’ $95 million Series D financing round brought its valuation to over $700 million, and its lifetime fundraising totaled $214.1 million since its founding in 2015.
Plus, each of these companies’ impact cannot be overstated. Misfits Market, for example, sources organic produce and rescues wasted or funny-looking conventional foods; it provides consumers with discounts of up to 40 percent on these items and then ships them straight to their door in 100 percent recyclable cardboard boxes. CEO Abhi Ramesh reminisced on his inspiration – a small farm in Pennsylvania with thousands of wasted apples – and summarized his resulting company in a blog post:
“We consider ourselves to be an affordable online grocery store, starting with produce. For us, ugly food is a portion of it, but it’s all about ending waste and inefficiency. We’re going into the food supply chain, finding all of these massive issues resulting in waste across different parts of the food system, and turning them into opportunities for affordability and accessibility for any household across the country.”
As of 2021, the company had rescued 228,531,504 pounds of food and delivered it to 44 states, plus the District of Columbia.
Imperfect Foods, meanwhile, was created by a pair of Ben’s – Ben Simon and Ben Chesler – with more of a focus on rescuing “cosmetically-challenged produce,” as they describe it after the pair created the Food Recovery Network to rescue wasted food from colleges and universities and saw the potential impact. In addition to groceries with “cosmetic quirks, irregular sizes, or are just surplus,” customers can also order other sustainable products and snacks, all of which are delivered on the same day every week along with the other weekly subscriptions in your neighborhood, in one trip and one van, to avoid excess carbon emissions. The company also collects your used clean gel packs, egg carton liners, and silver insulated liners from where it drops off your food. It then works with local partners like female-founded Dispatch Goods to sanitize the clean gel packs before re-using in future orders and with Recyclops to turn the liners into new household product packaging. As of June 2022, the company has saved over 172 million pounds of food and 5.55 billion gallons of water and averted more than 85,600 tons of emissions. It has even provided calculations to help you see your individual impact: the average shopper saves 6.10 pounds of food and 14.41 gallons of water and averts 4.78 pounds of emissions with each order.
The combination will expand Misfits Markets’ geographic reach to the few remaining parts of the U.S. it has not yet accessed, which is important to the company, Ramesh explains: “We want to service the entire country in every single zip code in every single state and get food to people who don’t have access today.” Imperfect Foods CEO Dan Park, who will serve as a strategic advisor for several months, also expressed optimism about their combined capabilities in the press release: “The combined experience and expertise of this newly merged team will exponentially increase our ability to take on established players in the traditional grocery space.” With many Imperfect Foods executives and employees making the jump, the expanded team is expected to number about 3,000 employees. United, they are poised to revolutionize the online grocery market.