Canadian investors are among the big winners in Nestlé SA’s purchase of U.S. meal delivery company Freshly, Inc. in a deal announced Friday that is worth up to US$1.5-billion.
Freshly’s first institutional investor, Toronto-based BrandProject, which finances fledgling consumer products companies, invested less than US$1-million and made a 100-times return on its investment – the best return in its seven-year history – said BrandProject founder Andrew Black.
“They only had four or five employees at the time we invested,” said Mr. Black, who first financed Freshly in 2014 two years after its founding and subsequently introduced the company’s co-founders Michael Wystrach and Carter Comstock to larger investors.
One of those was White Star Capital, which was founded by Canadians and has offices in Montreal, New York and London. White Star, which initially invested in 2015, said in a post on Medium that it had earned a 12.1-times return on its investment in Freshly, the second direct-to-consumer company it has backed that sold for US$1-billion, after Dollar Shave Club.
“From the very beginning, we were captivated by [the founders’] passion and vision to provide people everywhere with fully prepared, nutritious meals that make it easy to eat healthy food,” White Star said in the Medium post.
Nestle, which bought a minority stake in Freshly in 2017, bought the rest of the New York-based company in a deal valuing it at US$950-million, with a potential for additional earnouts of up to US$550-million. The deal closed Friday. Other investors in Freshly include Highland Capital Partners and Insight Partners.
“Consumers are embracing e-commerce and eating at home like never before. It’s an evolution brought on by the pandemic but taking hold for the long term,” Nestle USA head Steve Presley said in a statement, adding the acquisition would help Nestle accelerate in the U.S. food market.
Freshly, the largest ready-to-eat meal subscription service in the U.S., ships over one million meals and was on track to generate US$430-million in sales this year, Nestle said.