Factory reset: Tech startups raise big bucks to help companies cut waste
Society has become somewhat accustomed to disposable goods, be it cheap garments, budget phones, or plastic packaging.
But with Earth facing untold apocalyptic catastrophes in the decades to come, there has been a growing push to do something — anything — to counter the predicted cataclysmic events that await us.
A few months back, Seattle became the first major U.S. city to ban single-use disposable straws, while England could become the first country to ban them next year. Starbucks, meanwhile, will usher out plastic straws across all its stores globally by 2020.
These are small measures by anyone’s standard, but they feed into a broader trend that’s striving to cut waste and reduce our dependency on disposable goods.
Food, in particular, is one area where we’re seeing this trend amplified, with big-name investors lining up for their piece of the waste-cutting pie.
Food for thought
Earlier this month, Santa Barbara-based Apeel Sciences raised a whopping $70 million from U.S. hedge fund Viking Global Investors, Andreessen Horowitz, Upfront Ventures, and others. This took the company’s total funding to $110 million.
So what is Apeel doing to reduce food waste, exactly? Well, it essentially applies a second layer of skin to fruit and vegetables to reinforce protection and prolong their shelf life by reducing water loss and oxidation. The company said that produce that has been given the Apeel treatment typically stays fresher for up to three times longer.
Above: Apeel Sciences applies a second layer of skin to fruit and vegetables to prolong their shelf life.
The funding came just a few months after Apeel Sciences commercialized its product via avocados at Costco and Harps Food Stores in the U.S., which it said led to a 65 percentage-point margin increase and a 10 percent sales increase in Hass avocados.
“As Apeel products continue to hit the shelves, the retail world is now beginning to experience what was clear from day one, which is that Apeel is a product with the potential to change the world,” said Yves Sisteron, founder and managing partner at Upfront Ventures, which first invested in Apeel Sciences as part of its $5.8 million series A round back in 2014.
Earlier this week Swedish startup Karma raised $12 million for a marketplace that helps restaurants and supermarkets cut food waste by selling their surplus goods at a discount. Investors included Swedish investment firm Kinnevik, with participation from Bessemer Venture Partners (one of the oldest venture capital firms in the U.S.), Electrolux, and E.ventures.
The premise behind Karma is simple. The consumer creates an account and can see what’s available in their area — the offerings are whatever food outlets have an excess of, so there won’t necessarily be a consistent choice of goods each day. But if you’re not fussy and all you’re looking for is a good discount, then you may find cakes, bread, sandwiches, freshly squeezed lemonade, and pretty much anything else.
Above: Karma lunch offerings in London.
Image Credit: Karma
The problem that Karma is looking to fix is this: Roughly one third of food produced globally each year never reaches a human mouth, according to the United Nations’ Food and Agriculture Organization. That’s $1 trillion worth of edible food ending up in a landfill.
Karma is available across Sweden, while it also recently launched in London, its first international market. But with a fresh $12 million in the coffers, it’s planning to launch into more international markets across Europe and the U.S.
Both these startups show that while ethical concepts are attractive to investors, you’re not going to get anywhere on altruism alone: Your idea and execution needs to be underpinned by a solid business.
“While the Karma team is really going after a good cause, we share a very fundamental belief with the founders: to have a lasting and meaningful impact, companies around sustainability need to be for-profit and have an attractive business model,” said E.ventures partner Jonathan Becker.
Elsewhere in the culinary realm, Full Harvest this week raised $8.5 million in a series A round of funding led by Spark Capital. The San Francisco-based startup offers a B2B marketplace that helps farmers sell surplus and imperfect goods to food and beverage companies.
Above: A… deformed apple?
Image Credit: Shutterstock
Up to 40 percent of food in the U.S. goes uneaten each year, according to the Natural Resources Defense Council, and a big part of this problem is that grocery stores and supermarkets don’t want to buy ugly fruit and vegetables because, well, consumers don’t want to buy them either. But a wonky apple is every bit as nutritious as an aesthetically pleasing apple, which is how Full Harvest manages to find a market that connects farms with food buyers. The company already works with a number of U.S. food and drink companies, and it has claimed that it helped one U.S. farm grow its profits by 12 percent per acre.
“A ReFed report has stated that $10 billion invested into solving food waste will bring $100 billion of value to society due to true cost accounting across the entire supply chain, economy and environment,” the company said in a statement. “We also have sold close to 7 million pounds of produce that would otherwise have gone to waste, which is equivalent of preventing 430 million gallons of water from going to waste — enough to provide drinking water for 8 million people for a year — and 2.5 million kilograms of CO2e emissions from being produced.”
But it’s not just the food industry that’s seeking traction in the waste-cutting world.
Factory reset
Last week, London-based Unmade raised a modest $4 million in a round of funding led by Felix Capital. The Techstars London alumnus develops a software platform for fashion brands to offer customizable clothes directly to consumers.
Above: Unmade: Customizing a sweater on Farfetch’s website.
The on-demand model not only allows fashionistas to fine-tune patterns or mix colors around, but it also promises a more sustainable business. Clothes are not created in bulk before demand is established — each item is effectively made-to-order, thus cutting down on waste. The company said that it now works with three of the top fashion brands in the U.S.
This kind of manufacturing potentially has a big future — last year Amazon was awarded a patent for a similar system that’s capable of producing products, including garments, after an order is placed.
On-demand product manufacturing means that supply meets demand rather than surpasses it, and ensures a bunch of perfectly wearable goods do not end up in the trash.
“By conservative estimates, 10 percent to 25 percent of all clothes made each season are never sold and go to landfill or are burned — after travelling through a network of stores and discount retailers,” added Unmade cofounder and chief product officer Ben Alun-Jones. “When you think the fashion industry today is at least $2.4 trillion, this is a huge environmental issue. Our mission is to transform the current business model of the fashion industry, one that frequently leads to significant overproduction and waste, and start to create clothing that is either tailored by or made for the consumer.”
The made-to-order model could also have an impact on return rates, thus reducing waste even further — if a customer has played an active role in designing their garment, they may feel more attached to it when it arrives.
“With our current customers, we have also seen a big reduction in return rates once they start using our platform,” Alun-Jones continued.
Last month, Atomico — the VC firm founded by Skype co-creator Niklas Zennström — led a $10 million investment in Oden Technologies. The London-based company serves up the hardware and software for manufacturers to track faults and establish patterns that may affect their factory equipment performance. It’s all about analytics and big data.
While the chief driving force behind Oden Technologies centers on improving efficiency and cutting costs, firmly embedded in this business model is the need to reduce waste. Manufacturing facilities can waste millions of dollars worth of materials each year due to factors such as “variation and imprecise specifications,” something that Oden says it solves.
By improving operational processes on the factory floor, Oden claims it can detect inefficiencies and issues “up to 95 percent faster” and cut waste by “hundreds of thousands of dollars” each year.
And this is what major VC firms like Atomico are investing in: “Industry 4.0,” which includes big data, artificial intelligence, and robotics. It’s about digitizing the $12 trillion manufacturing industry to make it more efficient — which means less waste.
“We believe that the global manufacturing industry is on the brink of a new machine age; one in which the industrial Internet of Things and cloud analytics, coupled with machine learning and artificial intelligence, are set to transform existing production processes, slash waste, drive incredible efficiencies and increase output,” Atomico said at the time of its investment.
We’re seeing shifts in this direction across the industrial spectrum. While the world prepares for self-driving cars to infiltrate its highways, some industries are already embracing autonomous driving technology.
Sugarcane is among the largest crop globally in terms of quantity produced. During collection, large trucks normally drive beside the harvester at low speed to take the sugarcane off-site. However, up to four percent can be lost as the truck tramples fledgling crops, which is due to driver error. As such, Volvo revealed last year that it was trialing self-steering trucks to help sugarcane farmers improve crop yield — drivers don’t have to worry about keeping the truck in a straight line as the steering is all automated.
Above: Volvo self-steering truck.
Image Credit: Volvo
Whether it’s moving away from disposable straws, ensuring food doesn’t end up in a landfill, confirming every piece of clothing has a buyer before it’s made, or minimizing factories’ excess material burn rate, the goal is the same: Cutting waste will play a major part in the future of our planet. Crucially, this also means improving a company’s bottom line, which will be pivotal in garnering buy-in from more companies.
“Waste inherently means something of no value or of no use,” Unmade’s Alun-Jones added. “Removing that from manufacturing makes good business sense and is clearly of financial value. Because the scale of waste in some very large industries is so massive, this is clearly a big opportunity for startups.”
Source: VentureBeat
