September 30, 2016

Veteran New York-based food tech company, FreshDirect, has raised $189 million in additional funding through a round led by J.P. Morgan Asset Management through its PG Digital Growth Fund, and including W Capital and the AARP Innovation Fund. This round brings the company’s total fundraising to $280 million spread across four rounds from six investors.

Under the terms of the funding, Larry Unrein, head of J.P. Morgan Asset Management’s private equity group, and Ashmi Mehrotra, the group’s managing director, will both join FreshDirect’s board of directors.

The new capital will be used by FreshDirect, which currently ships fresh produce, meats, and groceries to addresses in regions of New York, New Jersey, Pennsylvania, Connecticut, and Delaware, to “open up some new geographies,” company co-founder and CEO, Jason Ackerman told Tech Crunch.

The funding will also be allocated to supporting the expansion of the company’s manufacturing and distribution capabilities, and to launch new businesses that are designed to meet consumers’ shifting needs and preferences, according to a company statement.

Launched in 2002 and profitable since 2010, FreshDirecct currently exceeds $600 million in annual revenue. Through connecting customers with locally sourced fresh foods and maintaining the fastest farm-to-table delivery timelines, FreshDirect has seen customer retention rates that exceed industry averages.

“FreshDirect is an established innovator, has a solid roadmap for growth and a large addressable market, said Katie Stitch of W Capital Partners. “We were passionate about FreshDirect a year ago and believe the company is well positioned to continue to lead the online food retail sector.”

This round follows closely upon FreshDirect’s introduction of FoodKick – an on-demand, mobile-first delivery service that currently provides one hour delivery of food, alcohol and household groceries in select locations of Brooklyn and Queens. However, looking toward the future, Ackerman told TechCrunch that he expects FoodKick to play an increasingly pivotal role in the business as it plans to roll out the service in Manhattan – noting that the company has been “seeing a huge expansion of our customer base,” since FoodKick’s launch.

FreshDirect has done well to innovate and stay ahead of the curve in light of increasing competition from not only other food delivery services such as AmazonFresh, which has just expanded into Los Angeles, New York, and Baltimore, Instacart, and Google, but also home delivery meal kit companies like Blue Apron and Plated.

The crowding of the potentially trillion dollar space doesn’t seem to weigh heavily upon Ackerman however, who when asked about the expansion of AmazonFresh by TechCrunch responded, “We’ve been competing with Amazon for a while now…and we’ve continued our growth rates all the way through.”

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Lynda Kiernan