Vancouver-based startup Fresh Prep has secured $21 million CAD in Series B financing to expand its meal kit delivery service to new geographic markets.
The startup’s all-equity Series B round, which closed earlier this week, was led by Vancouver-based private equity firm Yellow Point Equity Partners. The round was supported by fellow Vancouver investor Renewal Funds, which led Fresh Prep’s $7 million Series A round in 2020. The new capital brings Fresh Prep’s total funding to date to more than $35 million CAD, including a $3.3 million financing round in late 2018.
Fresh Prep claims it has seen revenue growth of 540 percent over the last three years, exceeding its income targets.
Fresh Prep, which currently has over 350 employees, claims it has seen revenue growth of 540 percent over the last three years, exceeding its income targets. Now, fresh funding in hand, the meal kit delivery startup aims to build on this growth and expand its team, invest in automation and new products, and bring its solution to new markets. The startup told BetaKit it plans to expand to Alberta this fall, with a focus on Calgary, Edmonton, Red Deer, and the surrounding areas.
Founded in 2015, Fresh Prep is a certified B Corp that delivers pre-chopped, locally-sourced ingredients in reusable cooler bags directly to consumers. The startup currently sells meal kits to over 20 British Columbia (BC) municipalities throughout the Lower Mainland, the Okanagan, and Vancouver Island, serving tens of thousands of customers across the province.
Fresh Prep claims it is the only meal kit company in Canada that employs its own delivery drivers for meal kit delivery and offsets all of the emissions from its deliveries with carbon credits.
“Fresh Prep is a uniquely innovative player in the meal kit delivery space,” said Dave Chapman, managing partner of Yellow Point, who will be joining Fresh Prep’s board as part of the round.. “Its substantial growth to date has been underpinned by the management team’s commitment to their values of sustainability and customer focus.”
Chapman added that the firm believes Fresh Prep’s values “will resonate with customers across the country.”
Amid COVID-19, Fresh Prep said it saw increased demand for its products, as the popularity of meal kit servicesgrew significantly during the pandemic, which led many to stay in and avoid unnecessary grocery trips.
According to a June report from San Francisco-based market research firm Grand View Research, the global meal kit delivery services market size is expected to increase to nearly $20 billion by 2027, fuelled by this pandemic-driven adoption and millennials’ increasing interest in cooking at home.
But some experts also say the industry is due for a decline in demand amid increasing vaccination rates and restaurant reopenings.
Given this environment and the strength and profitability of its sustainability-focused model, however, Fresh Prep believes it is well-positioned for future growth.
“We have proven out the profitability of Fresh Prep’s business model,” said Husein Rahemtulla, Fresh Prep’s COO and co-founder. “While our profits are currently reinvested back into our business as we’re focused on growth and innovation, we know that our underlying fundamental model is sound.”
Fresh Prep plans to use some of the funding to improve its recently launched Zero Waste Kit product, a reusable meal kit container. The startup also intends to add customizable meal kits, ready-to-eat options, and more family-focused options.
Over the next year, Fresh Prep aims to hire 80 people across marketing, culinary, engineering, and operations roles, as well as over 120 hourly associate positions at its production facilities.
UPDATE (09/02/21): This story was updated to include responses from Fresh Prep.
Feature image courtesy of Fresh Prep