Imperfect Foods

Private Equity Manager (GP)

Case study

About the company

Imperfect Foods was founded in 2015 with a mission to eliminate food waste and build a better food system for everyone. The company offers imperfect (yet delicious) produce, affordable pantry items, and quality eggs and dairy, delivering conveniently and safely to customers’ doorsteps. Imperfect Foods prides itself on offering affordable groceries, so customers can get the healthy, seasonal produce they want alongside the grocery staples they rely on, without having to compromise their budget or values.

Why invest in the company

The nearly one trillion dollar US grocery market is moving online rapidly, further accelerated by the COVID-19 pandemic that caused an immediate inflection point in adoption. The emerging “ugly produce” grocery category offers a differentiated and recession-resistant value proposition, marrying the brand ethos of sustainability with greater convenience and freshness at low prices. Insight Partners (“Insight”) identified Imperfect Foods as an early mover in this category, highly advantaged by its purpose-built value chain with high barriers to entry. Through Insight’s due diligence, the manager identified further potential opportunity to deepen the company’s defensibility and expand margins through continuous improvement across the value chain, including enhancements in automation, analytics, and customisation.

Our relationship

Pantheon’s relationship with Insight Partners dates back to 2005. Pantheon has invested in eight Insight funds and has completed five co-investments alongside the manager.

ESG approach

Imperfect Foods was founded to fight food waste by finding a home for the imperfect or “ugly” fruits and vegetables that farms could not sell to grocery stores. Imperfect Foods demonstrates a strong commitment to ESG causes both through its mission of environmental sustainability as well as through its commitment to its employees and the community more broadly:

• Imperfect Foods helps save food from waste, thereby avoiding emissions to produce food that is ultimately wasted, which currently account for 25% of the food system’s greenhouse gas emissions. In 2020, the company saved over 50 million pounds of food, avoiding over 20,000 tonnes of carbon dioxide emissions.
• Imperfect Foods’ last mile delivery network efficiently batches together customers and neighbourhoods, emitting approximately 12,800 tonnes less of carbon dioxide than if each customer went to the grocery store themselves, or the equivalent of taking 2,800 cars off the road for one year.
• Imperfect Foods’ Reduced Cost Box programme provides a discount on food orders to qualifying low-income customers. The programme more than tripled in size in 2020 due to increased need caused by the COVID-19 pandemic. The company fulfilled over 282,000 orders of Reduced Cost Boxes, serving nearly 13,000 customers.
• Imperfect Foods has made a number of commitments supporting diversity, equity, and inclusion (“DE&I”) within its workplace and more broadly. The company established three employee resource groups in 2020 – Black Imperfectionists Group, Imperfeminists, and Imperfectly Out. The company also launched an Anti-Racist Pledge to support black communities, improve internal practices, and promote racial justice. Progress in 2020 includes establishing a DE&I board, investing in DE&I software for recruiting to minimise implicit bias, and hiring a talent manager with a DE&I background.