In a region that has largely cultivated enterprise technology ventures, direct-to-consumer startups took center stage in 2021.
Greater Philadelphia D2C startups raised record amounts of money and grew rapidly in a year where investor confidence soared and the local ecosystem was flooded with pandemic-era entrepreneurs. The region has a history rooted in the successes of health care and enterprise tech startups that have had large exits, but D2C companies have made strides that show promise for the future.
Two of the region’s D2C startups further cemented their unicorn status in 2021, while other startups gained traction with consumers.
Philadelphia-based delivery unicorn Gopuff accounted for the lion’s share of the region’s venture capital in 2021, securing more than $2 billion of the $5.2 billion raised by area startups in the first three quarters of the year, according to a Pitchbook-NVCA Venture Monitor report. Its valuation is now at $15 billion thanks to its latest capital raises.
The food, alcohol and home goods delivery service’s geographic expansion extended overseas, launching in the United Kingdom, and it made several acquisitions to fuel its ambitions. Gopuff expanded into France and Spain with its acquisition of Dija, a European delivery platform focused on snacks, groceries and health products.
The company is also looking beyond the digital delivery space. Its first retail locations opened in Texas and Florida, and it plans to add a brick-and-mortar store in San Francisco as well.
Misfits Market, another Philadelphia-area D2C unicorn, experienced major growth in 2021. The “ugly produce” vendor, founded in North Philadelphia and based in Delanco, New Jersey, saw its valuation reach $2 billion after it secured $225 million in a Series C-1 in September. Misfits Market sells organic produce, meat, seafood, plant-based proteins, dairy products and eggs.
Founder and CEO Abhi Ramesh said that order volume in the first quarter of 2021 more than doubled from the same period in 2020, and the company has its eye on international expansion into Canada and Mexico. An initial public offering could be in the cards, but Ramesh said it’s possible that Misfits Market will remain privately held.
Direct-to-consumer newcomers like Lula and Mainfactor planted their flags in Philadelphia this year, as well.
Founded by two Drexel University graduates, Lula offers delivery from convenience stores and bodegas through existing platforms like DoorDash, GrubHub and Uber Eats, as well as through its own platform. The delivery startup secured more than $1 million in growth capital this year, and it is in the midst of raising a seed round.
Lula has already snagged big-name partnership deals with Doordash and Uber Eats to integrate Lula’s tech into their platforms. The startup is also collaborating with National Convenience Distributors, a wholesale distributor with more than 14,000 clients across 11 states, to convert NCD’s clients into “micro-fulfillment centers,” onboarding them onto Lula’s delivery platform and helping them sell more through delivery.
Mainfactor emerged from stealth mode this year, raising a $69 million seed round to acquire small and midsize businesses and connect them to influencers and celebrities to grow them through creator-driven marketing. On the “early curve of the D2C consolidation,” Mainfactor is buying up Shopify-based retail brands in apparel, cosmetics and health and wellness.
Founder and CEO Mike Fiebach started the company in 2020. He previously founded Fame House, a digital marketing and e-commerce company acquired by Universal Music Group in 2016.
