The financial terms of the acquisition, was was completed late last month, were not disclosed.
Le believes Fresh Prep’s operational scale will help accelerate the growth of Peko’s business.
Founded in 2021 by CEO Sang Le and COO Arielle Lok, Peko offers a delivery service for “peculiar” and surplus produce, which it sells to customers at a discount from retail prices. The Vancouver company claims it has saved customers close to $1 million in grocery bills and diverted over 200,000 pounds of food from landfills since its launch.
Fresh Prep co-founder and COO Husein Rahemtulla said both food delivery firms share an interest in providing customers with sustainable and high-quality food options, noting that Fresh Prep was “really impressed by what the Peko team has built in a short time.”
“This strategic move represents a step further in Fresh Prep’s commitment to tackling food waste,” added Rahemtulla.
Peko will continue delivering its produce boxes and pantry items under Fresh Prep’s ownership, and Peko’s co-founders will remain involved with the company. Le will continue to lead Peko, while Lok will consult on Peko’s operations. All of Peko’s employees have also joined Fresh Prep as part of the deal. For every Peko box sold going forward, $1 will be donated to local food recovery charities the Food Stash Foundation and Vancouver Food Runners.
Founded in 2015, Fresh Prep claims be “Canada’s most sustainable meal kit delivery service.” The certified B Corporation delivers pre-chopped, locally-sourced ingredients in reusable, insulated cooler bags that can be used to make a variety of meals, sides, salads and snacks directly to consumers.
Fresh Prep has raised more than $35 million CAD in total funding to date from a group that includes Yellow Point Equity Partners and Renewal Funds. This includes a $21 million Series B round in late 2021 that the company used in part to fuel its geographic expansion plans.
Peko currently serves only the Metro Vancouver area. Le believes Fresh Prep’s operational scale—it currently serves 35 municipalities across both British Columbia and Alberta—will help accelerate the growth of Peko’s business.
Prior to this deal, Le said Peko had secured minimal external capital to date. This includes a “low 5 figure” pre-seed investment from Next Canada and over $100,000 in non-dilutive funding from pitch competitions and grants like Visa She’s Next, the Queen’s Entrepreneurship Competition, McGill Dobson Cup, and Telus Innovation Challenge.
“We’ve been wanting to grow Peko via geographical expansion, but were definitely having a tough time in the current market condition[s], especially as a bootstrapped company,” Le told BetaKit. “We decided to join forces with Fresh Prep given their operational scale and shared values, which will allow Peko to scale much faster.”
Following in the footsteps of its new parent company, Peko plans to obtain B Corp certification. Peko also intends to launch a reusable packaging program and expand to Alberta in summer 2023.
UPDATE (03/03/23): This story has been updated to include additional information and commentary from Peko.
Feature image courtesy Peko.