Chef'd gets $25M investment from Smithfield Foods
- Chef'd raised $35.2 million in funding, according to an SEC filing. Chef'd CEO Kyle Ransford told CNBC Wednesday that pork producer Smithfield Foods invested $25 million. An additional $10 million investment, which has already been reported, came from Campbell Soup, with $200,000 coming from online grocer Fresh Direct.
- Chef'd has eschewed venture capital and instead turned to strategic investors who are seeking to adapt to digital trends in the food industry, the business network said. The corporate involvement gives the meal-kit company different insight than some of its competitors.
- The investment shows despite the challenges facing Blue Apron since it went public in late June, there is still demand to invest in the hot-growth meal delivery space.
Blue Apron's woeful showing since it went public on June 29 — the stock is down about 40% — has left some on Wall Street questioning the future of the popular sector that has attracted several independent meal-kit companies, as well as grocers such as Kroger and Publix and even Amazon. CNBC also noted that Plated, another competitor in the space, recently raised $12 million in debt.
The debt and funding raised by Plated and Chef'd shows there is still interest in the space, at least for now. What's interesting about Chef'd is that it has turned to well-established companies to fund its growth.
Campbell Soup announced in May that it spent about $10 million to invest in the startup — a move that not only gave the iconic soup maker another way to sell its products, but also allowed it access to valuable insight into customer shopping patterns and their purchasing decisions. Smithfield is likely viewing its investment in much the same way.
"The goal here is to make bold moves and do so at a rapid pace," Denise Morrison, Campbell's CEO, said at the company's investor day last month. "It's the early days for grocery e-commerce, but we see a larger opportunity to generate more top line growth for Campbell by accelerating our digital marketing and e-commerce efforts — but we must be bold in our strategy and choices, and we must move fast."
For Chef'd, it's a wise move to take advantage of established food companies not only for their financial backing but the insight they have collected during decades of selling billions of dollars worth of products. They also have a deep understanding of shoppers as well as the familiarity with how run a successful business and procure and distribute products.
It's clear why this is a popular space: The meal-kit delivery services market has ballooned to $5 billion in sales, according to Packaged Facts. The market intelligence firm forecasts continued robust growth ahead, particularly as millennials and Gen Z begin to buy homes and start families. Meal kits provide an easy and convenient way to get dinner on the table. For an industry hungry for growth, meal kits could be an attractive option, a factor Smithfield and Campbell Soup likely have taken into account when investing in Chef'd.
- CNBC As Blue Apron shares sink, rival Chef'd reels in $35 million from Smithfield and Campbell Soup
- United States Securities and Exchanges Commission Notice of Exempt Offer of Securities
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