Misfits Market

Misfits Market is the consolidator of US surplus-grocery delivery, and it has emerged from the sector's shakeout as the last operator standing at scale — having absorbed its largest rival, Imperfect Foods, in a 2022 all-stock deal, and acquired last-mile/reusable-packaging startup The Rounds in May 2025. The structural advantage is margin: because Misfits sources cosmetically imperfect and surplus inventory from farms and suppliers below wholesale, it ended 2025 with gross margins above 40% — roughly double the ~20% typical of conventional grocery chains — which is the number that decides whether online grocery, a business that has bankrupted many, can actually work. Founder-CEO Abhi Ramesh has laid out a credible path to $800M in sales in the next couple of years and $1B annually beyond, and Forbes has profiled the company as building toward an "Amazon Prime of perishable food" model. The food-waste narrative gives it a durable brand and a "rescue revenue" story that resonates with value-conscious and sustainability-minded shoppers simultaneously — an unusual dual appeal. With more than $500M raised (last valued around $2B in the 2021 SoftBank-led Series C) and the category consolidated around it, Misfits owns the assortment, the logistics network, and the supplier relationships that a new entrant would need years and hundreds of millions to replicate.

Misfits Market's profitability has been perpetually one or two years away: the combined Imperfect Foods entity was projected to cross $1B in sales and reach profitability by early 2024, and that target slipped. Online perishable grocery is one of the hardest models in commerce — cold-chain logistics, high spoilage, expensive last-mile delivery, and thin absolute dollars per order — and a 40% gross margin still has to cover all of that before anything reaches the bottom line. The $2B valuation was struck at the 2021 zenith of grocery-delivery enthusiasm (SoftBank Vision Fund 2 leading), and the comparable public and private markdowns since then imply the mark is stale; a down-round or structured recapitalization would sit heavily on the preference stack over $500M raised. Subscription-box grocery also fights persistent churn: the surplus-inventory model means shoppers cannot reliably get the same items week to week, which frustrates the habit-formation that retention depends on. Amazon, Walmart, Kroger, and the discounters can all undercut on price and convenience with vastly deeper logistics, while the "ugly produce" thesis itself has been questioned — retailers increasingly sell imperfect produce directly, shrinking the surplus arbitrage. Consolidation left Misfits the survivor of a category that shrank, and being the last operator in a structurally difficult niche is only a win if that niche can actually turn a durable profit.