Meal-kit company Sun Basket has raised $9.2 million in Series C-2 financing led by Unilever Ventures, with participation from Baseline Ventures and Founders Circle Capital. This new investment increases the company's $15 million Series C raised in January to $24.2 million. In total, it has raised $52 million.
Founded in 2014, the San Francisco-based company is part of the $1.5 billion market that has built an industry around delivering premeasured ingredients with recipes to customers' doorsteps. For its part, Sun Basket has homed in on the nearly $36 billion organic food market with its healthy meal kits that cater to special dietary needs such as paleo or gluten-free.
The meal kit is an already crowded market, with more than 150 players in the United States. Increasingly, Sun Basket is also finding itself competing directly with grocery stores like Kroger, Whole Foods, and Publix, which are all testing their own meal kits in stores.
But Sun Basket CEO Adam Zbar doesn't view the $650 billion grocery industry as a threat so much as a market to be transformed. "While I've always loved grocery stores, their model is in the process of being massively disrupted by online players, since the direct-to-consumer online model is a radically more efficient supply chain," said Zbar.
Considering the way the internet has upended clothing retail, it could stand to do the same to grocery stores. A report by the Food Marketing Institute and Nielsen estimates that online grocery shopping could reach $100 billion in sales by 2025.
The reality is that e-commerce businesses are far more capital efficient than their brick-and-mortar brethren. Consider that Kroger is one of the largest supermarket chains, with nearly 2,800 stores across 35 states. Each time it opens a store, it is a $19 million investment. "Sun Basket has three distribution facilities that, via our online presence, reach 98 percent of U.S. households with less than $10 million in capex spent," said Zbar.
This latest round of funding coincides with the launch of Sun Basket's Midwest Distribution Center. The new funds will allow the company to continue to scale, automate its facilities, and acquire users.