Illustration: Aïda Amer/Axios
By the time Imperfect Foods sold to Misfits Market, it had lost that "food waste wunderkind" glow. As the company's cap table grew — and as stakeholders got smarter on sustainability — Imperfect's "no waste" business model faced increased scrutiny.
Why it matters: Imperfect Foods' story reflects the tension between effective sustainability and the venture capital world's growth-at-all-costs philosophy.
Flashback: Imperfect Foods (FKA Imperfect Produce) launched out of San Francisco in 2015, with around $38,000 raised via crowdfunding site Indiegogo.
- Its pitch: Send customers blemished fruits and vegetables that didn't meet retail's aesthetic standards — but were still perfectly edible — for a discounted price.
- The initial marketing featured a series of photos of imperfect offerings — a heart-shaped potato, a carrot with "legs" — sporting google-y eyes.
- In 2016, Imperfect Foods raised a $3 million Series A and continued to rake in funds in subsequent years from investors like Insight Partners, Norwest Venture Partners, FirstMark Capital, Thirty Five Ventures, Justin Caldbeck, Flybridge Capital Partners, Maveron, Shasta Ventures and Kevin Durant.
- It topped out at its $110 million Series D in 2021, valuing the startup at $450 million pre-money, per PitchBook. A Bloomberg article pegged the startup's valuation at $700 million in 2021.
Meanwhile, the startup scrambled to grow on pace with its aggressive fundraising strategy.
- It added new markets — including a broad East Coast expansion — in June 2019 and broadened its grocery offerings.
- Along with "imperfect" fruits and vegetables, offerings included packaged snacks, beverages, facial products and baby food following a company rebrand in October the same year.
- The company also saw a COVID-related bump in business as consumers eschewed grocery shopping for grocery delivery — but like other e-commerce players, that tail of growth was short-lived.
Reality check: As Imperfect Foods grew, critics questioned accounts of how much wasted food it was actually sparing.
- "Those apples they were selling now, they were going to juicing before. It's not a question of, would they go to the grocery store or not," ReFED’s Gunders tells Axios.
- "So the question becomes, 'If they were going to juicing, but now are being sold in a box as fresh apples — does that count as reducing food waste?'"
- ReFED analyzes startups in the food waste space — and issued a report on Imperfect Foods — to evaluate their claims of waste reduction, among its other business functions.
Yes, but: Gunders cedes that any reduction in food waste by rerouting minimally blemished foods is a net positive for the food production ecosystem, since it frees up space for even more undesirable foods to move up in the production queue.
What they did: When growth flatlined in 2021, Imperfect Foods' board of directors ousted CEO Philip Behn and replaced him with interim CEO Steve Nave, per Insider.
- Dan Park, the former CEO of Canada-based BuildDirect Technologies, took over permanently in January 2022.
- Imperfect Foods closed its warehouse in San Francisco and laid off about 50 employees in August. Soon after, it announced its sale to peer Misfits Market, another food waste e-commerce company.
- Misfits CEO Abhi Ramesh told Axios in September that Imperfect Foods was initially looking at raising additional funding — but ended up selling in an all-stock deal.
What they're saying: "Misfits Market has successfully completed the acquisition of Imperfect Foods, uniting both brands to deliver a better, more affordable, and sustainable grocery experience," Ramesh told Axios in an emailed statement responding to a request for comment for this story.
- "As a combined company, we will continue to focus on reinventing the food supply chain to bring more accessibility, affordability, and sustainability to online grocery," Ramesh said.