Pepper's $50M Boosts Independent Distributors
Pepper, a San Francisco-based AI-powered eCommerce and growth platform for independent foodservice distributors, has raised $50 million in a Series C funding round led by Kayne Anderson Capital Advisors. The platform delivers B2C-caliber storefronts, AI-automated ordering, and integrated sales, marketing, and finance tools to help distributors compete with industry giants like Sysco and US Foods. The funds will accelerate product development, sales and marketing expansion, and team growth.
Food Distribution Tech Funding Surges
This investment arrives as supply chain and distribution tech sees robust activity: project44 raised $750M in December 2023 for visibility software, while FourKites secured $200M Series E in May 2024 for predictive tracking. Pepper differentiates by targeting independents with a full-stack solution, addressing their unique need for affordable, niche-specific digital tools.
$335B Market's Digital Divide
U.S. foodservice distributors generate $335 billion in annual sales, with independents comprising roughly 45% of the market but only 25% digital adoption. Manual ordering via phone or fax persists, causing errors, delays, and lost sales amid rising customer demands for online B2C experiences. Legacy ERP systems fail independents due to high costs and poor fit for perishable goods management.
End-to-End AI Unlocks Efficiency
Pepper's suite includes Storefront for branded eCommerce, Order Agent for conversational AI ordering, and Hubs streamlining sales pipelines, marketing campaigns, and AR invoicing. Compared to competitors like BlueCart (order management only) or Acctivate (inventory focus), Pepper integrates everything, enabling supplier collaborations and real-time analytics.
As Pepper CEO AJ Bruno shared:
"Independent distributors are squeezed by giants' scale but power local communities. Our AI handles the grunt work, letting reps focus on relationships and growth."
Kayne Anderson Signals Scale-Up
Kayne Anderson, with a track record in food investments like Sweetgreen, led alongside Octave Ventures, Eberg Capital, BOND, and others. Bringing total funding to over $105M post-2022's $27M Series B, this round underscores confidence in Pepper's 150+ customer base and 3x YoY growth. It positions Pepper for aggressive market share capture in a consolidating sector.
Supply Chain Tech Boom Continues
The broader logistics tech market will expand from $12B in 2023 to $45B by 2030. Recent rounds highlight fragmentation: project44 emphasizes multi-modal tracking ($750M), FourKites real-time ETAs ($200M). Pepper carves the independent foodservice niche, where low tech maturity offers 5-10x ROI via automation.
Founders' Grocery Tech Pedigree
Co-founder and CEO AJ Bruno previously built Delivery Agent into a $100M+ funded platform serving Walmart and Kroger with online grocery fulfillment. This expertise in perishables eCommerce infuses Pepper with proven scalability, evidenced by quick wins like 50% order automation for early customers.
Hiring Spree Powers National Push
Pepper will expand its 100-person team, prioritizing sales, marketing, and AI engineers. Product roadmap targets advanced features like predictive demand forecasting. With traction in broadline, produce, and protein segments, the company aims to triple its footprint among 4,000+ U.S. independents.