Factor 75 Case Study
Factor 75
Acquired by Meal-Kit Delivery Giant, HelloFresh
Factor 75 is an online, subscription-based meal delivery service that ships healthy, restaurant-quality meals directly to consumers throughout the contiguous United States. With an emphasis on “nutrition for performance,” the company’s name stands for the philosophy that 75% of fitness results and everyday performance derive from diet. The market of customized meal delivery services has taken the world by storm over the last few years as consumers look for nutritious and affordable meals that meet the demands of their busy lifestyles.
Factor 75 was founded in 2011 by former MMA fighter, Nick Wernimont. In 2015, Nick brought in former private equity investor, Mike Apostal, as CFO/COO. Mike later became CEO of the company.
Before being connected to Flow Capital, Factor 75 had more than doubled revenues in each year since its inception. In the growing market of meal kit/delivery services, the company was able to establish a competitive advantage by providing high-quality, delicious food that requires minimal effort and is made to the highest of nutritional standards. Factor 75 also focused on regional delivery (close to its contract manufacturers) so that they could ensure freshness and customer satisfaction. Factor 75 was also a marketing powerhouse. Beyond organic lead generation, the company succeeded at paid customer acquisition with a trailing twelve months LTV:CAC ratio above 3:1 in 2016, exceeding industry standards.
In 2016, Nick and Mike were exploring financing options to help support Factor 75’s high growth. While the company did successfully raise a seed round earlier that year, they both agreed they needed a flexible form of growth capital to supercharge that growth while minimizing dilution. In October, they were introduced to Flow Capital’s revenue-based financing.
While there were other revenue-based financing lenders at the time, Flow Capital offered a unique perpetual structure. This provided Factor 75 the flexibility to grow on their own terms and on their own timeline. Payments would match the natural ups and downs of their business, so they were never met with a payment they couldn’t afford. The Factor 75 team was also happy that Flow Capital did not require personal guarantees or board seats.
In December, Factor 75 received growth capital from Flow Capital to fund customer acquisition/retention and expand their market. From that point forward, Factor 75’s growth accelerated exponentially. Approximately two years after Flow Capital’s initial investment, Factor 75 and Flow Capital decided to top-up the investment for additional growth. Factor 75 was able to grow the size and value of its business significantly, expanding geographically and into adjacent markets before their Series A round, which followed shortly after.
Factor 75 Case Study
For the following four years after Flow Capital’s investment, the company was ranked as one of Inc. Magazine’s Fastest-Growing Private Companies in America for four consecutive years. Between 2017 and 2019, their 3-year-growth came out to 1,018%.
- 2017 Ranking: #133
- 2018 Ranking: #264
- 2019 Ranking: #447
- 2020 Ranking: #715
Following their successful growth, Factor 75 decided it was time to buy out Flow Capital’s investment in October 2019.
Just over a year later in November 2020, Factor 75 was acquired by meal-kit delivery giant, HelloFresh, for a total purchase price up to USD $277 million.
