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Online grocer FreshDirect has closed a $189 million investment round led by J.P. Morgan Asset Management on behalf of its PEG Digital Growth Fund II LP, returning investor W Capital and other investors advised by New York City-based J.P. Morgan Asset Management, including the AARP Innovation Fund.
“The funding will fuel expansion into new markets, increase capacity with new manufacturing and distribution facilities, and launch new businesses that meet today’s consumers’ needs as their preferences and buying habits evolve,” explained Jason Ackerman, co-founder and CEO of New York City-based FreshDirect.
Further, Larry Unrein, head of J.P. Morgan Asset Management’s private equity group, and Ashmi Mehrotra, managing director, have joined FreshDirect’s board of directors.
“As demand for fresh ingredients delivered to your door continues to rise, high-quality food, produce and packaged goods providers are drawing significant attention from the investment community,” noted Unrein. “FreshDirect is one of the first to connect its customers with farmers and artisans at the click of a button. The company is also expanding its reach through the new mobile, on-demand offering FoodKick. By meeting the demands of the modern shopper on these two fronts, FreshDirect remains a forward thinking leader in this growing market segment.”
Profitable since 2010, the e-grocer generates more than $600 million in annual revenue mainly through its leading online market shares in the New York City and Philadelphia metro areas. It boasts customer retention levels well above industry averages and profitability in all of the geographic regions it serves.
“FreshDirect is an established innovator, has a solid roadmap for growth and a large addressable market,” said Katie Stitch of W Capital Partners, also based in New York. “We were passionate about FreshDirect a year ago and believe the company is well positioned to continue to lead the online food retail sector.”
“The AARP Innovation Fund is focused on supporting companies that are developing new services and products focused on the interests and needs of people age 50-plus and their families,” added Scott Frisch, EVP and COO of Washington, D.C.-based AARP. “FreshDirect’s ability not only to provide customers with fresh, healthy food, but to deliver it directly to their home makes the company an ideal fit with AARP’s investment strategy.”
FoodKick, which FreshDirect added to its portfolio earlier this year, is an on-demand, mobile-first delivery business that caters to the spontaneous needs of urban residents with a curated selection of local food, alcohol and everyday essentials. Having exceeded expectations in its launch markets of Brooklyn and Queens, FoodKick will soon expand service to Manhattan.
FreshDirect delivers directly to customers throughout five states, including the New York City and Philadelphia metropolitan areas.