Unilever Takes Stake in IPO-Bound Meal Kit Maker Sun Basket

Updated on
  • Sun Basket said to hire Bank of America, Jefferies for IPO
  • Listing could value the San Francisco-based firm at $1 billion

Unilever’s venture arm has taken a stake in Sun Basket Inc., the meal-kit delivery company that people familiar with the matter said is heading toward an initial public offering.

Unilever Ventures, along with Baseline Ventures and Founders Circle Capital, are investing a combined $9.2 million as an extension to Sun Basket’s series C round. That brings the latest round of funding to $24.2 million, Unilever said in a joint statement with Sun Basket, which has now raised $52 million.

Sun Basket has hired Bank of America Corp. and Jefferies Group LLC to lead an IPO that could value the company at about $1 billion, people familiar with the matter said, asking not to be identified because the discussions are private.

Sun Basket has differentiated itself in the crowded food-delivery space by focusing health-conscious customers seeking gluten-free, paleo-diet and vegetarian recipes, founder and Chief Executive Officer Adam Zbar said in an interview. The new funds will be used to scale nationally and automate distribution facilities for its pre-measured meal kits, a first step to offering more customized choices.

“We want to be a true alternative to the grocery store, where we are offering enough variety to appeal to your taste buds and health needs,” Zbar said.

That could later allow customers to pick from hundreds of recipes at different price points, Zbar said. A kale salad with chimichurri, for example, might cost a bit more with filet mignon as the protein or a bit less with sirloin or turkey meatballs. For now, Sun Basket offers 18 choices from its classic menu in multi-meal boxes that cost $11.49 a serving or  $9.99 a plate for its family menu boxes.

Differentiation will be important as San Francisco-based Sun Basket and competitors such as Blue Apron Inc. mature.

Blue Apron

Sun Basket and Blue Apron, which has started its IPO process, could wind up trying to convince public market investors to buy into their stories at about the same time. Blue Apron has already stumbled: The New York-based company put its listing plans on hold to focus on improving profit margins and reducing the cost of acquiring customers, people familiar with the matter said in December.

Zbar declined to comment on potential listing plans. Jefferies also declined to comment. Bank of America didn’t respond to requests.

Generally, the most important considerations for the industry’s investors are efficient supply chains and the ability to expand with relatively little capital, Zbar said. Every dollar that Sun Basket spends on customer acquisition is paid back within 90 days, he said. Zbar added that customers on gluten-free and paleo diets tend to have higher retention rates.

Going Natural

For Unilever, the Sun Basket investment is yet another investment focused on natural, non-GMO foods. Last month, the consumer-product giant agreed to buy hipster condiment brand Sir Kensington’s for about $140 million, according to people familiar with the deal. Last year, it bought Seventh Generation Inc., a Vermont-based maker of natural and environmentally conscious cleaning products.

Unilever has also acquired Dollar Shave Club, a subscription toiletry-delivery business popular with millennials.

Unilever shares rose 0.5 percent to 49.68 euros in Amsterdam trading at 2:54 p.m. on Thursday. The stock has gained 27 percent this year.

Sun Basket isn’t for sale, Zbar said. The company has discussed partnerships with large consumer products companies to distribute the meal kits, though.

“We are sort of at the inception of the space,” Zbar said. “Meal kits will evolve more generally to what people want. We’ll do that by leveraging data and having a great food supply chain.”

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