ResTech

Nestle Leads $77 Million Funding Round For Meal Kit Startup Freshly

In funding news this week, Freshly, the meal delivery startup — co-founded by Michael Wystrach and Carter Comstock — has raised $77 million in a Series C funding round that will help support the startup’s expansion beyond the 28 states it currently serves. Freshly’s dinners cost just $8.99 and can be prepped in the microwave in three minutes.

Swiss-based food giant Nestle — headed by Jeff Hamilton, president of Nestle Foods Division — led the Series C funding round with support from existing investors Highland Capital Partners, Insight Venture Partners and White Star Capital, among others. All told, Freshly has raised $107 million since its launch in 2015.

Freshly currently serves markets on the West Coast and in the middle region of the country. The company, headed by CEO Michael Wystrach, estimates that it will courier over eight million meal kits this year. It has been straining to keep up with increasing meal delivery demand.

Nestle’s investment — along with support from Highland Capital Partners, Insight Venture Partners and White Star Capital — will ease those growing pains. Although, it should be noted that, despite Nestle’s generous support, there is no plan to include Nestle’s food brands in any of Freshly’s meal kits.

Meal kits comprise less than 1 percent of all food and beverage retail sales in the U.S., but they’re winding up to be a major disruptor to both restaurants and grocery stores, and food manufacturers are taking note. Unilever invested in meal kit startup Sun Basket; Campbell Soup invested in Chef’d and Blue Apron announced an IPO earlier in June.

American consumers are increasingly interested in buying groceries online. That’s why Instacart and Google Express have been a success, and it was a major factor in last week’s announcement by Amazon that it had acquired Whole Foods Market for $13.7 billion.

“The traditional food model is shifting, and we continue to see an increase in more health-conscious consumers who are seeking new options and services that fit easily and effortlessly into their lifestyle,” said Jeff Hamilton, Nestle.

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The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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