How ReFED & Closed Loop Partners aim to inject more catalytic capital into food waste reduction

Investment in food waste-combatting technologies and businesses has risen steadily over the last decade, garnering a record $2 billion in 2021. But given the scope of the world’s food waste problem, more work must be done to reduce the 30-40% of food that goes unsold or uneaten annually.

The US-based food waste nonprofit ReFED and circular economy impact investor Closed Loop Partners have identified catalytic funding as the missing piece in this growing funding landscape; they recently launched a new blended finance platform — Circular Food Solutions Funding Platform — to channel more such catalytic capital into food waste innovations.

Catalytic capital, as defined by the MacArthur Foundation and Tideline, is where investors accept “disproportionate risk or concessionary returns to generate positive impact and enable third-party investment that otherwise would not be possible.” It’s often, but not always, in the form of grants.

“The moment has never been as right as it is now [to launch],” Alexandria Coari, ReFED’s VP of capital, innovation and engagement, tells AFN.

How it works:

The Circular Food Solutions Funding Platform aims to drive catalytic capital into scaling food waste solutions and thereby opening the door to more traditional capital options for them in the future. The platform will also provide private and philanthropic financing to organizations, municipalities, and innovators.

• The fund targets to raise: an $80 million investment fund, the $10 million ReFED Catalytic Grant Fund, and a $10 million innovation program.
• ReFED has already announced the first grantees of the Catalytic Grant Fund, which provides grants to de-risk and scale high-impact solutions to food waste. The Upcycled Food Association, Food Recovery Network, and Hidden Gems are the first grantees. 
• Closed Loop Partners will manage the targeted $80 million investment fund and the $10 million innovation program.
• Current anchor funders include Google and The Betsy and Jesse Fink Family Foundation, among others.

Why do we need it?

In the US, 35% of all food goes unsold or uneaten, equating to about 90 billion meals’ worth of food annually. That’s a $418 billion loss and has the same climate footprint as the entire US aviation industry, according to ReFED estimates.

Plenty of startups with solutions to this problem exist; the challenge is finding capital to fund them that’s patient enough to sustain a longer timeframe compared to many tech startups out there.

Reasons for this slower return for food waste solutions boil down to one major thing, according to Coari: the agrifood value chain operates within long-established confines that can’t simply be dismantled overnight. Changing behaviors that have been ingrained in the process for decades will simply take longer.

Still, there’s plenty of evidence that food waste businesses can do that if given enough runway. “We have seen tons of case studies in this sector where companies have started with, say, a $100,000 research grant and have been able to scale because someone was willing to take the chance and be patient with that capital,” says Coari. She name-drops a few companies including Apeel Sciences, Afresh, and Hazel Technologies as examples of this. 

In the wake of climate change, Covid-19 impacts, and the geopolitical climate, and with 2030 fast approaching, time is of the essence to get more solutions added to that list.

“Since ReFED’s inception there’s been this recognition that if we’re going to have a shot at fighting food waste, we need not only quantify the size of the problem and identify solutions, we have to make the actions that are needed across a variety of stakeholders,” says Coari. “We don’t have that much time left. We need the right type of capital and they need to get going now.”

On background:

ReFED, which specifically focuses on the United States, estimates that the US needs $14 billion of public, private, and philanthropic capital to cut nationwide food waste in half by 2030 (a goal in keeping with the United Nations Sustainable Development Goal 12.3.1). Coari says that $3 billion of that $14 billion needs to be catalytic or long-term capital that doesn’t require a quick return. She’s been planning the new platform for years now.

• To raise both awareness and funds, ReFED works to marry technological and policy innovation with philanthropic and investment capital and, of course, lots and lots of credible data about food waste.
• In 2022, ReFED launched its Food Waste Capital Tracker, which sources investment data to give both investors and solutions providers a “deep-dive look” at private capital food waste investments over the last decade.
• New York-based Closed Loop Partners, a veteran impact investor, runs a number of funds that invest specifically in solutions contributing to the circular economy for a number of different sectors including food and agriculture.
• The organizations started working together shortly after ReFED’s inception in 2015. Coari says the new funding platform leverages the expertise of both — impact investing for Closed Loop Partners and food waste expertise for ReFED — and makes the initiative “more powerful than either one of us could do on our own.”