FreshRealm raises $200M in convertible preferred equity

FreshRealm, a B2B2C provider of fresh meals for retailers, closed a $200 million capital raise consisting of convertible preferred equity, CEO Michael Lippold tells Axios.

Why it's the BFD: The somewhat unique (and potentially highly dilutive) structure could indicate companies will start seeking alternative financing options amid a challenging fundraising environment.

Of note: Lippold declined to comment on valuation, investors and company revenue.

• "We have no debt and a strong balance sheet, which gives us a tremendous amount of flexibility as we map out the next few years," Lippold says, however.

Details: Ventura, Calif.-based FreshRealm's fundraise increases the total amount raised to date to $300 million, also all convertible preferred equity.

• Proceeds will be invested in a number of initiatives, primarily expanding the number of distribution centers from its current four.
• The idea is to have a facility in every major region of the U.S. so that all retail locations are within a 10-hour drive.
• "Having products available in places like convenience stores and club stores is in our sights," he adds.

How it works: FreshRealm works with some of the largest retailers in the U.S. and its products are available for sale in some 10,000 locations and are delivered to 1 million DTC customers.

• It provides private label products to retailers and has its own branded line coined Kitchen Table.
• It's not your average millennial's meal kit. The fresh ingredients are already assembled, so no chopping or measuring.
• Products come in three forms: ready-to-eat (microwave), ready-to-cook (oven) and low-effort meal kits.

The bottom line: "We believe that the fresh meals category is the next big growth category in food. The objective is to be the leading company in the category," Lippold says, adding that it's a $30 billion market opportunity.