Freshly Acquired By Nestlé
November 16, 2020 | Abree Murch
Where do you find a billion-dollar idea? For Freshly founder and CEO Michael Wystratch, it was in the kitchen of his family’s steakhouse in Sonita, Arizona. In 2012, Wystrach was looking for a way to fit healthy eating into his busy schedule. With help from the chefs at the steakhouse, he began to prepare portioned meals in advance that he could reheat later during the week. Wystrach extended the service to friends through word of mouth and quickly formed a subscription meal delivery service. With the help of incubator and investor BrandProject, he extended the service even further, established a headquarters in New York City, and rebranded his company. On January 1, 2015, Wystrach officially launched Freshly, which would go on to become a household name and catch the eye of the world’s largest food company.
Healthy Meals, Delivered
Freshly has since become the market leader in the prepared meals space. The company delivers gourmet, ready-to-heat meals to your door. Customers select their preferred number of fresh (never frozen), nutrient-rich, healthy meals from a constantly rotating menu for delivery once or twice a week, depending on their needs.
After its launch, Freshly grew quickly to meet rising demand. The company went from 400 employees in July 2017 to almost 2,000 employees as of October 2020. To support this growth, Freshly raised capital from BrandProject, Highland Capital, and Insight Partners, a set of established venture firms with significant experience in the industry.
AVG’s investment opportunity came via a direct connection with Michael Wystratch. The Yard Ventures led our participation, and invested alongside sibling funds Blue Ivy Ventures, Chestnut Street Ventures, Purple Arch Ventures, and AVG’s Total Access Fund in Freshly’s 2017 $77M Series C funding round.
There were a number of features that made Freshly an attractive investment:
- Strategic lead investor. Nestlé is the largest food company in the world with major initiatives in healthy eating, convenience, and a stated interest in the U.S.
- Ideal co-investors. The round included institutional financial investors Insight Venture Partners (investors in related B2C businesses like HelloFresh, DeliveryHero, EZCater) and Highland Capital Partners (significant consumer focus with Handy, Harry’s, Glasses Direct, Rent The Runway).
- Growth and momentum. At the time of our investment (2017), Freshly was adding a second facility on the East Coast to more than triple their capacity and enable the company to reach 45 states.
- Experienced executive team. Founder and CEO Michael Wystrach surrounded himself with an impressive leadership team with significant functional and industry experience.
Bringing Convenient Meals to the Masses
Nestlé acquired Freshly on October 30, 2020, for $1.5B — $950 million plus potential earnouts of up to $550 million based on future growth. Today, Freshly delivers 100 million meals to 48 states, has opened six manufacturing and distribution facilities, and has offices in three countries.
In a press release, Michael Wystratch said: “Our mission is to make eating healthy easy by bringing nutritious, high-quality meals directly to customers’ homes. Convenience and nutrition are driving forces in the future of food, and our becoming a part of the world’s largest food company confirms that. With Nestlé, we will have access to resources, research and development, and years of experience that we can tap into to catapult our growth plans and move closer to our goal of being in every household in America.”
Nestlé, for its part, is excited to welcome Freshly to the family. Nestlé USA Chairman and CEO Steve Presley said: “Consumers are embracing ecommerce and eating at home like never before. It’s an evolution brought on by the pandemic but taking hold for the long term. Freshly is an innovative, fast-growing, food-tech startup, and adding them to the portfolio accelerates our ability to capitalize on the new realities in the U.S. food market and further positions Nestlé to win in the future.”