An online farmers’ market pioneering a “farm-to-fridge” platform to connect city dwellers with local food sources nearby, has attracted investment from venture capital firms in its Series B round of funding.
Farmigo, which is headquartered in Brooklyn, raised $16 million in a round led by San Francisco VC Formation 8 Partners, a new investor, and involving existing investors Benchmark Capital and Sherbrooke Capital.
The platform uses a just-in-time model, where producers only harvest food that has already been ordered on Farmigo’s digital marketplace. As a result, local producers can provide the freshest food, combat food waste, and prevent premature spoilage, which often happens with food traveling long distances.
The deal comes as food e-commerce continues to gather traction in the venture capital community worldwide, and in the same week that Indian grocery delivery service PepperTap raised $36 million in Series B capital in a round led by Alibaba-backed Snapdeal, Amazon’s India-based rival. This is the third fundraising round for PepperTap this year — it raised $1.2 million seed capital in March and quickly followed it with a $10 million Series A in April — and the company is considering adding a further $20 million to its Series B, according to TechCrunch.
Farmigo plans to use the funding to facilitate the launch of its fourth market in the Seattle-Tacoma region, which kicks off on October 14, 2015. With three other markets operating in New York, New Jersey, and the agriculture-rich Northern California region, Farmigo claims that its farm-to-fridge delivery service has the largest footprint in the US to date.
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To use Farmigo, hungry shoppers log on to the company’s website, which prominently displays the words “Ditch the Supermarket”, create an account, and start perusing the current offerings from nearby farms, orchards, and other eclectic food producers.
The service delivers customer’s orders to central neighborhood pick-ups including schools, private homes, or workplaces.
“Our goal is to replace the antiquated supermarket model,” said Benzi Ronen, founder, in a press release. “We’re building a better food ecosystem that’s better for all of us—for our families, our communities, our farmers and the environment.”
According to Farmigo, its farm-to-fridge model has allowed it to reach a broader consumer base while also remaining affordable. And the company’s decision to circumvent the conventional distribution chain of supermarkets has enabled them to provide farmers and local food producers with a bigger slice of the profit pie, while also giving consumers a different kind of food experience, according to Ronen.
These days, food e-commerce is a hot commodity, with an ever-growing list of companies announcing multi-million dollar funding deals. In July 2015, Plated scored a $35 million Series B while Blue Apron scooped up a whopping $135 million in Series D funding one month prior. As the competition stiffens, investors may become less willing to dole out more cash for food e-commerce.
But Formation 8, one of Farmigo’s Series B investors, thinks Farmigo’s platform offers something that other food e-commerce companies don’t. “This is an extraordinary advantage over door-to-door delivery models that will be critical to winning in the rapidly-changing food landscape,” said Formation 8 partner, Jon Lonsdale, in a recent statement. “Farmigo’s technology and community-driven distribution model allows it to reach more people in a way that’s affordable for consumers and sustainable from a business perspective.”
The company must be doing something right. In early 2015, Farmigo’s business has more than doubled, with sales reaching five times the amount placed during the same time last year. Farmigo expects the upward trend to continue, projecting that sales figures will triple again in the next six months.
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