Dive Brief:

• Imperfect Foods has raised $72 million in Series C funding in a round led by Insight Partners, according to a company press release. This brings the company’s total funding to $119 million since launching in 2015.
• The funding will be used to bring grocery delivery service nationwide, increase the company’s capacity in fulfillment centers and improve its technology. Imperfect, which launched as an ugly produce company, added full grocery boxes last fall including meat, produce, dairy, seafood and shelf-stable goods.
• The company said it has seen average order sizes double year-over-year and weekly order volumes double since January as more people see the company’s expanded assortment and buy online.

Dive Insight:

The additional funding Imperfect Foods received will help the company scale more quickly to meet demand driven by COVID-19. The pandemic has boosted sales significantly, with more than 40% growth in Imperfect’s active user base since the start of 2020, CEO Philip Behn told Grocery Dive in an email.

Although Imperfect may have broken out of the increasingly crowded produce-only model, the company may face just as much competition as it pushes a full grocery assortment. Both startups and traditional grocers have seen e-commerce spike dramatically in recent months, with online grocery sales hitting a record high in April as shoppers spent $5.3 billion on grocery delivery and pickup. 

Central to the company’s model is reducing food waste, which it will continue to do through better technology that can connect customers with producers and farmers that have excess or imperfect products.

COVID-19 has also presented a unique opportunity to minimize food waste. Behn said that because many suppliers have lost their bulk buyers during the pandemic, Imperfect has “rescued” a surplus of items like popcorn kernels, organic meat, cheese trays and broccoli, and can offer those to customers in their grocery boxes. 

Behn also noted some of its popular grocery and produce items right now include chicken breast, grass-fed ground beef, roasted cashews, quinoa, dried mangos, green beans, blueberries, grapes and broccoli. 

Launched as a West Coast company out of San Francisco, Imperfect now also operates in markets along the East Coast and in the Midwest. Among the cities it serves are Seattle, Los Angeles, Chicago, St. Louis and New York City.

Jeff Wells contributed reporting to this story.