Meal-delivery startup Freshly has raised $77 million in new funds, financing that was led by Swiss-based food giant Nestle.
On Tuesday, Freshly announced a new Series C funding round that also was supported by existing investors including Highland Capital Partners, Insight Venture Partners, and White Star Capital. Since launching in 2015, Freshly has raised $107 million, a figure that includes the Series C financing. The new financing will be used to support Freshly’s expansion—the service is currently available in 28 states, mostly servicing the West Coast and middle region of the country.
“Nestle is the largest food company in the world and this is the first sizable investment [from their industry],” said Michael Wystrach, co-founder and CEO of Freshly, in an interview with Fortune. “The evolution of food in grocery stores is dramatically changing. We are at the very early stages of this movement but it is gaining traction and going to get better and better.”
Meal kits are a relatively new emerging category that aims to challenge both grocery stores and restaurants by sending kits to consumers/ homes that include nearly all the ingredients needed to prepare a fresh meal. There are dozens of services available, each with their own marketing hook, at times hoping to lure vegetarians, or paleo dieters, or those that want to learn more about cooking. Here’s Freshly’s pitch: it delivers fully prepared meals that can be microwaved and ready to eat in just three minutes. No cooking required.
While meal kits represent less than 1% of total food and beverage retail sales in the U.S., the nation’s largest food manufacturers are paying attention to…