Food startup Daily Harvest has a major challenge: convincing consumers who have long been taught that “fresh is best” that frozen food can be just as healthy, if not more so.
The company, which launched last year, sells frozen, single-serving organic smoothies, overnight oats and chia puddings that are all shipped directly to the home starting at $6.99 apiece if a customer were to commit to buying a 24-pack (That would amount to a nearly $168 order). To date it has shipped over 1 million smoothies and founder and CEO Rachel Drori is bullish about the company’s potential growth despite the cost and the common perceptions of frozen food.
“One of the challenges that Daily Harvest has ahead of us is people have a misconception of frozen food. They think of pizza and frozen, microwaveable dinners,” said Drori in an interview with Coins2Day.
Drori says the frozen produce that is the base of the items Daily Harvest sends is in fact fresher than much of the produce that is found at the local grocery store. Produce is often picked green and ripens in transit to the grocery shelf; while frozen produce is picked at peak ripeness and frozen within hours to maintain their optimal nutrients.
Two celebrity investors are convinced. Gwyneth Paltrow, the Oscar-winning actress and founder of lifestyle brand Goop, and 23 time Grand Slam tennis champion Serena Williams are part of Daily Harvest’s Series A round that also includes venture capital firms WME Ventures, Collaborative Fund, 14W, and Rubicon Venture Capital. The size of the financing round wasn’t disclosed.
“Gwyneth Paltrow is an authority on health and wellness,” says Drori. “The reason we are so excited to partner with her is she is somebody who people will listen to and [then] take a second look at frozen food.”
Williams, meanwhile, in a prepared statement lauded Daily Harvest’s female-led business and said she looked “forward to helping more people gain access to nutritious meals.”
In recent years, Paltrow’s investments in startups has proven to be a diverse bunch. She participated in a Series A fundraising round for a kids’ clothing subscription startup called Rockets of Awesome at the beginning of this year, as well as reportedly invested in athletic apparel brand Outdoor Voices and fast-casual concept Beefsteak. But Paltrow is most well known for her relationship with Goop, a startup she founded in 2008 and also steers as CEO. Goop got a $10 million cash infusion last fall and is known for selling clothing and vitamins while also providing content. Paltrow has established herself as a leading celebrity voice on offering up tips on living a healthy lifestyle—though her recommendations do at times generate controversy.
Ultimately, Daily Harvest sees the relationship with Paltrow as a positive one. “We all aspire to eat well and Goop is all about this aspirational lifestyle,” says Drori. Paltrow wasn’t available to comment on the investment in Daily Harvest. It also isn’t yet known how much Paltrow will talk about Daily Harvest in future press interviews, though that’s generally a benefit for any food startup that inks a deal with an A-list star.
Williams has also established credentials as an investor. Along with her sister Venus, she bought a stake in the Miami Dolphins back in 2009. Williams also personally invested in the UFC sports league and last month it was announced she joined the board of online survey company SurveyMonkey.
While Daily Harvest—like many subscription-based food services—is expensive and thus has a lofty barrier of entry, Drori says the foods it ships are a bargain because they are organic and free of refined sugars and preservatives. As Daily Harvest boosts scale, pricing could become more competitive. That’s a promise a lot of subscription-based offerings are making.
Daily Harvest is tapping into two hot trends in the food industry: the movement toward healthier foods and the proliferation of e-commerce for the grocery category. On the former, many food and beverage executives now acknowledge that the consumer-driven shift toward healthy food isn’t just a fad, it is here to stay.
On the second point, 52 million Americans now buy their groceries online while millions more say they plan to increasingly bulk up their e-commerce shopping bags with foods and beverages. And subscription-based services are particularly popular for public figures. Lifestyle guru Martha Stewart has both a meal-kit service and a wine delivery company, and Super Bowl-winning quarterback Tom Brady joined with meal-kit startup Purple Carrot to develop a line of meals that the athlete himself likes to enjoy.
