Misfits Market, an online-only, subscription-based organic grocery retailer focused on sustainability and affordability, raised a lot of money this year. It’s deploying the $425 million in new capital to expand geographically and by product category.

In September 2021, Misfits raised $225 million in a Series C-1 round led by SoftBank Vision Fund 2, part of Japan-based SoftBank Group, with participation from the California venture capital firm Accel.

September’s funding followed a $200 million funding round just months earlier in April 2021.  Accel and New York-based D1 Capital Partners led that round [with participation from earlier investors. Since launching in 2018 in Philadelphia, Misfits raised more than $526.5 million from investors.

A $2 billion valuation

Mistits Market

Misfits Market offers subscription boxes of groceries at what it says is a deep discount compared to supermarket prices.

The latest funding round valued the retailer at $2 billion, according to a Misfits Markets statement. At the time, Misfits announced it would use the new capital “to fuel nationwide expansion and increase the selection of items available to customers as Misfits Market builds a complete online grocery platform.”

Here are some the ways Misfits put all that cash to use:

  • In November, the retailer launched delivery to every ZIP code in California. That geographical expansion followed the retailer’s entry into Arizona, Nebraska, New Mexico and Oklahoma in August.
  • The retailer doubled its product selection to more than 500 SKUs over the past last four months and plans to double again within the next six months.
  • At about the same time it expanded to California, Misfits added dairy products to its selection, including 25 kinds of cheese (including plant-based options). It plans to add butter, milk, yogurt, and eggs to the assortment in the coming months.
  • It also added other new categories including bakery products, meat, seafood and plant-based proteins.
  • Misfit Markets opened a new fulfillment center in West Jordan, Utah, in November

The retailer now operates in 44 states and the District of Columbia. It plans to operate in all 48 contiguous states in the first quarter of 2022, thus reaching its goal for geographic expansion, says Kai Selterman, chief strategy officer at Misfits. The retailer did not reveal revenue figures but says active customers and order volume have each grown five-fold since the start of the COVID-19 pandemic.

Not just for major metro areas

Further category expansion is in the works, he says. The frozen foods and prepared meals categories are coming soon, Selterman says, and many others are under consideration or development. In each case, he says, the new selections will be consistent with the retailer’s commitment to reducing food waste, offering organic, sustainably sourced products and low prices, he added.

“We’re hyper-focused on value,” Selterman says.

 

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